Budget 2024: Investment into R&D remains a top ask for the industry

New Delhi: Despite its growth potential, the bioscience industry faces challenges such as regulatory complexities, intellectual property issues, funding constraints for early-stage research, and skilled manpower shortages. Addressing these challenges will be essential for sustaining the momentum of growth and competitiveness in the global market.

Here we take a look at the budget 2024 expectations shared by the leading industry leader and experts:

Anil Matai, Director General, OPPI said, “To further support research to develop innovative pharma product, OPPI believes that the concessional tax rates under Section 115BAB of Income Tax Act, 1961 should be extended to companies solely engaged in R&D of pharma as well, beyond those related to manufactured articles. We also hope for the elimination of import duties on life-saving drugs, recognizing that individuals should not bear substantial taxes during health crises. Simultaneously, we call for increased incentives for innovation and to attract foreign investment in advanced research.”

“Emphasizing the importance of Intellectual Property (IP) protection, we recognize that India’s evolution beyond a volume supplier depends on prioritizing groundbreaking innovations. The implementation of these measures would not only strengthen the pharmaceutical and biotech sector but also enhance India’s global standing in innovation and healthcare,” Matai added.

Budget needs to spur research and innovation-led economic growth, writes Kiran Mazumdar Shaw, Chairperson, Biocon in her blog post on budget expectations. Shaw explains: “There are steep scientific, technical, and regulatory bars to developing new and advanced therapies, making it a challenging, time-consuming, and expensive proposition. Considering this, the government should reinstate the weighted tax deduction on R&D expenditure, which was available till March 31, 2020. It should consider offering 200% weighted tax deductions on all R&D expenses, including capital expenditures by both in-house and outsourced R&D setups (including Contract Research and Development organizations).”

“The reinstatement of this tax incentive was also recommended by the Parliamentary Committee on Commerce in 2021. The weighted deduction should also allow for costs incurred in training, nurturing and skill development of R&D talent. Further, the government should waive GST on proprietary drugs to provide financial impetus to new drug innovation in the country,” she adds.

Sharing his expectations, Sanjay Vyas, Executive Vice President and Managing Director, Parexel India, said, “With the country focusing on Research & Development (R&D) with much more tenacity than earlier, expectations are high for a similar allocation of budget in the R&D and healthcare sector in FY24-25. Additionally, continued encouragement of Foreign Direct Investment in the healthcare sector could be sustained in the months and years to come.  With the Indian pharmaceutical sector trying to reach the USD 130 Billion target by 2030, there is a renewed spirit of research in the areas of cell and gene therapy, biologics and biosimilars apart from the established generic and vaccine manufacturing sectors of the country.”

In her comments, Shweta Rai, Bayer Pharma Managing Director of Bayer Zydus Pharma Private Limited and Country Division Head for Bayer’s Pharmaceuticals Business in South Asia said, “The launch of National Policy on Research and Development and Innovation in Pharma-MedTech Sector and Scheme for promotion of Research and Innovation in Pharma MedTech Sector (PRIP) last year has given a boost to pharma innovation in the country. We hope that the upcoming budget also focuses on research and development in the country. This is a critical need on the background of rising incidence of chronic diseases. Investment in R&D is a long-term investment in the future of healthcare in the country. It will help provide affordable drugs for people who suffer from chronic diseases and require long-term treatment. It would empower India in its journey to becoming a global hub for end-to-end drug discovery.”

Susanta Kumar Ghosh, Scientific Advisor–Eco BioTraps and Former Scientist G, ICMR-National Institute of Malaria Research, Bengaluru, states, “National Centre for Vector Borne Diseases Control (NCVBDC) primarily addresses six vector-borne diseases, including malaria, Filaria, Kala-azar, Japanese Encephalitis, dengue, and chikungunya. Other diseases like Zika, West Nile Virus, Scrub Typhus, Kyasanur Forest Disease, and Crimean-Congo Haemorrhagic fever also fall under the purview of NCVBDC. According to available resources, the annual budget of NCVBDC is estimated to be around 1400 to 1500 crores, with a dedicated budget of 1500 crores. NHM provides additional supportive funding of about 8 to 10%, resulting in a total budget ranging from 4200 to 4500 crores. Despite the significance of addressing vector-borne diseases, this sector only constitutes 10% of the NHM budget, amounting to 4000 crores.

Surajit Chakrabartty, CFO, MedGenome said: “With the Union Budget approaching, it is an opportune moment to advocate for a comprehensive approach that accelerates the integration of genomics into India’s healthcare system, contributing to better health outcomes for individuals nationwide.  By channeling resources effectively, India can spearhead genomics research initiatives, paving the way for groundbreaking discoveries and innovations for the world. Allocating funds for large-scale programs to study rare diseases and integrating prenatal genetic testing into Maternity Benefits Schemes are vital steps that can lead to the creation of a healthier future generation and a reduction in the overall disease burden.”

In his comments, Nikkhil K Masurkar, CEO, Entod Pharmaceuticals said “With the pharmaceutical industry ranking as the world’s third-largest by volume, the potential growth trajectory of reaching $120-130 billion over the next decade is contingent on sustained innovation and discoveries. The inclusive financial assistance for entities of varying sizes, from large corporations to startups collaborating with government institutes, signals a comprehensive approach to supporting research endeavors. As we await the budget announcement, we remain optimistic that the proposed measures will further catalyze research and development, positioning the industry for a value-led future growth trajectory”

Dr Sat Kumar Tomar, Founder & CEO,  Satyukt Analytics said: “The government’s commendable decision to provide ISRO’s satellite data to the public holds vast potential for the agriculture sector. To fully harness this opportunity, we recommend prioritizing the automatic availability of satellite data for real-time integration into the agriculture delivery pipeline. Additionally, advocating for farm-scale credit assessments and crop insurance, promoting IoT and satellite-based technologies for efficient water usage, and encouraging precision agriculture advisories are vital steps. Policies incentivizing agri-tech startups to collaborate with institutions like KVKs and their involvement in awareness programs can further drive innovation. These initiatives align with Satyukt Analytics’ commitment to fostering sustainable growth in agriculture and financial sectors through cutting-edge decision analytics.”