Research-linked incentives crucial for pharma sector, Centre should incentivise companies as research progresses: Sudarshan Jain, IPA

The Indian Pharmaceutical Alliance (IPA) after meeting Union chemical and fertiliser ministry officials has recommended that the government should focus on providing research-linked incentives to pharma companies based on the stage of the study.

“If we have a very lucrative scheme for companies to improve their research, it can be a great thing, so if a company is doing a phase one research some kind of incentive can be given, if it progresses to phase two then certain kind of incentive can be given and similar incentives can be followed as the research progresses,” Sudarshan Jain, secretary general, IPA, told MoneyControl.

The government had held a meeting with the IPA and other industry bodies to discuss a research-linked incentive scheme for the Indian pharmaceutical sector that would help move up the innovation value chain.

“We have given various suggestions, and one of the important ideas is that the whole area of research has to be looked at in an integrated way,” Jain said.

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The IPA secretary general also said that India needs to reform the regulatory framework.

“The key aspect of research augmentation is regulatory simplification, second is industry-academia collaboration, third is funding,” he said.

 Policy for drug pricing

Highlighting that the drug pricing environment acts as a catalyst for innovation and quality, the IPA, which represents Indian research-based pharmaceutical companies, has said that the country should work towards price monitoring and free up the pricing system.

“The pricing environment is a very powerful signal for innovation and quality. Today the competition itself takes care of pricing and access, what we need is to get access to quality and innovation. So, instead of stringent price control, we should work towards price monitoring and liberalise the pricing system of the country,” Jain said.

Jain said that IPA has recommended to the government that the pricing policy should help manufacturers attract investments as a reward for innovation.

“It is very, very important that the research has to be rewarded, the innovator has to be rewarded and quality has to be improved. We should talk of value. We should shift our attention from cost to value, which is fundamental in a knowledge-based industry, and to take the industry to the next level,” he added.

Tax incentives for pharma companies

Jain said that pharma companies look to the government for tax incentives for identified pharma products that will enhance research in the longer run.

“We used to have a tax incentive of 200 percent and now that has gone down. So we have to revise that 200 percent tax incentive because as such, investment in research in India is very, very low, 6-7 percent of private investment.” If India has to go up the value chain, he said, spending on research will also have to go up. “Global companies spend 14-15 percent of their money on research, on a large base of sales. If we have to go up, we have to give the right incentives,” he added.

Jain said firms spending money on research should also be eligible for incentives. “If the companies are investing in research, we should allow the tax incentive as the benefit of research will be a huge bonus for the country,” he said.

Also read: Research crucial for Indian pharma industry to move from ‘volume’ to ‘value’: Mansukh Mandaviya

 Quality over quantity

The IPA general secretary said pharma companies in India need to get the value thrust right. “We need to move up from volume to value chain, because if India has to move to the next level, it has to get the value thrust. We are at 14^th place in terms of value but third in terms of volume. The focus for the industry should be moving up the value chain and the department of pharmaceuticals has come out with the draft R&D policy,” he added.

Jain said that the research and development policy announced by the government has emphasised industry-academia collaboration and on cluster formation but the funding part of the scheme is yet to be announced.