Indian pharmaceutical companies are advocating for tax incentives and financial support for innovative drug research as Prime Minister Narendra Modi’s government prepares the federal finance budget, likely to be presented in July.
This upcoming budget will mark Modi’s first significant policy announcement in his third term as prime minister. Experts emphasize that Indian drug manufacturers need to develop complex drugs beyond the usual generic variety if the country is to maintain its reputation as the ‘pharmacy of the world’ for affordable medicines.
“If the Indian government can provide income tax exemptions for 5-10 years for any new molecule developed in India, it will spur grassroots innovation and encourage companies to invest in new drug development,” Bharat Biotech’s Chairman Krishna Ella told Reuters at an event in Hyderabad on Friday. Bharat Biotech is known for developing India’s first indigenous COVID-19 vaccine, Covaxin.
India’s pharmaceutical market is projected to be valued at $130 billion by the end of the decade. The country is the world’s third-largest drug manufacturer by volume, following the United States and China, and serves as a hub for generic drug production.
Generic drugs are more affordable versions of brand-name drugs. However, research firm Bernstein highlighted in March that India needs to establish a domestic market where innovative drugs can be profitable at reasonable prices. “Spending millions on clinical trials without pricing power is not a viable business model for pharmaceutical companies,” Bernstein noted in an open letter to the prime minister. The firm also called for insurance coverage for novel drugs and harmonized regulatory standards for manufacturing and clinical trials to foster innovation.
Since 2020, India has offered incentives to boost the manufacturing of various products, from drones to drugs. However, manufacturers of novel drugs have not yet been eligible for these incentives. “The government is currently evaluating the effectiveness of its existing schemes, but the industry is anticipating a policy to enhance research and development efforts,” said Partha Saradhi Reddy, Chairman of HIV drug maker Hetero Drugs.
India’s pharmaceutical export sales, which dominate the US generics market, are expected to double to $55 billion by 2030, according to the Pharmaceuticals Export Promotion Council of India (Pharmexcil). “To maintain our leadership globally, we need to think outside the box,” said Raja Bhanu, Director General of Pharmexcil.
