The present financial budget has brought in a host of good news for the pharma industry with tax sops serving as the perfect holi gift from the Government.
I am yet to go through the fine print of the budget,but on the face of it there seems to be a reason to rejoice for the pharma industry as the weighted deduction on in-house R&D expenditure has been hiked from 150% to 200%.The primary benefit to be accrued by means of this sop would be for the cost incurred in filing international patents as well as carrying out clinical trials outside the country. However, as Kiran Mazumdar Shaw of Biocon states ,this would be only meaningful provided the sops are insightful and not mere cosmetic changes.
There is also increase in the weighted deduction on the payments to be made to the national research laboratories from 125% to 175% .Owing to this pragmatic move of the Government,it is expected that the R&D will get a boost in most pharma companies and innovation would be promoted.
Earlier last month when the excise duty on drugs was restored to 8 % from the present 4%,most pharma companies did hope for tax sops in the Union Budget especially in the R&D sector with some being hopeful of a complete tax exemption on the exports extended to the pharma companies.
The Association of Biotechnology led Enterprises (ABLE) opines that “the complete liberalization of pricing and payment of technology transfer fee, trademark, and brand name and royalty payments will augur well to attract fresh investments in the industry”.
Apprehensions however exist in sops being more beneficial to the pharma companies than the pure biotech firms though some biotech firms do believe that the much needed sops will provide them with a much needed global edge.
Amidst these,one can only hope that innovation gets the much needed boost and the chips fall where they may.
PS- Special thanks to Shouvik for the title of the post!
