Pharma

Sops for pharma cos might extend to 2015

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Drug makers can hope for tax sops for research activities to continue till 2015. Thus, consumers can hope for some reduction in the prices of drugs across the board and particularly in the case of cancer and HIV/AIDs drugs soon. The chemicals and fertilizers ministry is set to make a strong case before the finance ministry to reduce the 16 per cent excise duty on medicines by half on all medicines in the coming budget. The ministry will also specifically press for a total exemption of customs and excise duties on all cancer and HIV drugs. Research-oriented drug makers too can hope for getting tax sops for a longer time. Drug makers have been arguing that R&D is a long-term affair and therefore, incentives for research should be provided for longer periods. The scheme that allows companies to deduct 150 per cent of their research expenses while calculating their taxable income was set to expire at the beginning of this fiscal and it was extended till 2010 in this year’s budget. The ministry now wants this to be extended to at least 2015, it is understood. Acceptance of these proposals would largely depend on the overall revenue considerations. On earlier occasions, the finance ministry had rejected the proposal for excise duty cuts saying that duty cuts on finished products will lead to an inverted structure since ingredients will continue to be taxed at the same 16 per cent. However, chemicals and fertilizers minister Ram Vilas Paswan is trying to convince his colleagues about the need for duty cuts, which is also part of the new pharmaceutical policy now being reviewed by a ministerial panel. The pharma industry has been arguing that while the government is pressing companies to reduceprices, it should also do its bit to achieve this goal. They say the government should not make money by taxing diseases. In this year’s budget, the government reduced the 12.5 per cent customs duty on chemicals by 5 per cent, covering several acids, salts and other raw materials used in the production of drugs. The drug price regulator later revised prices of all medicines using these inputs to pass on the benefit to consumers.

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