The proposal for a universal social security system is the standout feature this Budget and it will have an indirect spin-off on the healthcare and pharmaceutical industry, say representatives of the pharmaceutical industry.
Despite no direct triggers for the sector, in terms of research incentives for drug companies or tax sops for hospitals – industry top-brass are optimistic about the Government’s intentions outlined in the Budget.
It is not clear if the Government’s healthcare spending has increased, but that seems to be balanced with the proposal for social security, health insurance coverage and pension, says Habil Khorakiwala, Wockhardt Ltd’s Founder-Chairman. These are important and major changes, he said, as drugmakers and hospitals get roped into supporting these schemes.
The Budget earmarked ₹33,152 crore for the health sector. Taking some welcome steps in health insurance, it also increased the tax deduction limit on premiums paid, besides upping support for senior citizens.
The Government also proposed the setting up of more institutes like Delhi’s All India Institute of Medical Sciences (AIIMS) in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam.
Also proposed were three new National Institutes of Pharmaceutical Education and Research in Maharashtra, Rajasthan, and Chhattisgarh.
The Budget should not be seen in isolation, but as a part of the reform exercise, says Ramesh Swaminathan, Chief Financial Officer of drugmaker Lupin, and against that backdrop it has done well, he added.
Speaking for large domestic drugmakers, DG Shah of the Indian Pharmaceutical Alliance expressed concern over the Finance Minister’s intention to set right the inverted duty structure and its impact on the domestic pharma industry. It should not end up being counter-productive, in terms of increasing dependency on raw materials from China, he said.
Hitesh Sharma, Partner and National Leader (Life Sciences) with Ernst & Young India, pointed out that the inverted duty structure proposal did not include pharmaceutical products. Besides, the increase in service tax from 12.36 per cent to 14 per cent would impact clinical trials (brought into this bracket in the last interim budget).
The Budget did not reflect the “Make in India” theme, at least for the pharmaceutical and lifesciences sector, he said.
Ranjit Shahani, Vice-Chairman and Managing Director, Novartis India, sums up the sentiment in the healthcare sector. It is a creative budget that is directionally right in terms of investment in infrastructure and so on.
But ignoring healthcare and not having major incentives for research and innovation is unforgivable, said Shahani, who is also former President of the Organisation of Pharmaceutical Producers of India (OPPI), a platform largely for multinational companies.