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Industry News
Pharmaceutical Industry NewsHow pharma can use deduction as additionPharmaceutical companies got a much sought-after wish granted when FM Pranab Mukherjee said in his Budget speech for 2010-11 that companies spending on in-house research and development will be taxed less. Drug makers can deduct double the amount they spend on in-house research while computing their taxable income for the assessment year 2011-12 onwards, up from the present deduction of one and a half times the research spend.The incentive for spending more money in research is welcome, but the quest for new drugs needs sharply higher investments by the public and private sectors and a change in focus from low-value copycat versions of MNC drugs to new therapies. According to official estimates, the top 25 pharmaceutical companies in India spent about 6-7% of their total sales on research and development in the last fiscal compared to the global average of 12-15%. That worked out to a paltry Rs 3,500 crore by 25 Indian companies in an industry with a turnover of Rs 90,000 crore including exports. The total R&D spend by the domestic industry is less than 1% of the $130 billion spent globally on drug research. Experts say that unless Indian drug makers spend more than 15% of their sales on research, they cannot have a noticeable presence in the world of sophisticated, high-value, new drugs.
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