In a bid to address rising input costs, particularly the steep hike in Active Pharmaceutical Ingredient (API) prices, the budget should propose incentives for domestic API manufacturers. Adding to it, a reduction in GST and import duty on APIs, will significantly enhance industry's sustainability. The establishment of Special Economic Zones (SEZs) for research, exempted from GST, merits serious consideration. The continuation of the Research-Linked Incentive scheme and tax exemptions for materials procured for R&D purposes is crucial for creating a conducive ecosystem that enables R&D-driven pharma companies in India to compete globally, he adds.

Chaudhary also proposes that the government must prioritise funds for digital integration in the pharma supply chain, ensuring better access and uninterrupted deliveries in real time, since this is crucial for healthcare transformation.

Sanjay Vyas, Executive Vice President and Managing Director, Parexel India, a biopharmaceutical services company, says, “With the country focusing on research and development and healthcare with much more tenacity than earlier, expectations towards similar allocation of budget towards these areas is expected for FY24-25. Additionally, continued encouragement of foreign direct investment (FDI) in the healthcare sector could be sustained in the months and years to come.”

As the Indian pharmaceutical sector tries to reach the $130 billion target by 2030, there is a renewed spirit of research in the areas of cell and gene therapy, new molecular entities, biologics and biosimilars apart from the already strong generic and vaccine manufacturing sectors of the country. Collectively, the industry is looking forward to the financial budget of 2024 with renewed anticipation specifically about R&D and healthcare focus, Vyas adds.

“In the upcoming budget, the focus can be inclined towards the establishment of Centres of Excellence, with a focus on encouraging research and innovation in the pharmaceutical sector. The budget can also focus on technological advancements such as Gen AI, where the government can boost investments in AI, identify new research areas for the pharma sectors and additionally promote academia-industry collaboration. The budget can also focus on implementing centralised data repositories for the country such as Electronic Health Records (EHR) and a centralised medical record database, to maintain transparency and avoid discrepancies.”

Vivek Shah, CEO, Meril, a homegrown global medical device company, states that the upcoming budget 2024, offers a crucial opportunity to accelerate the growth of India’s medical devices sector. The government of India has been constantly taking several measures to encourage investments and promote the Indian Medical Devices sector with schemes such as PRIP (Promotion of Research and Innovation in Pharma MedTech Sector) and MedTech Mitra.

“In the upcoming budget, the Government could further support the MedTech sector by reducing import duties and lowering GST on locally procured raw materials, particularly for critical medical devices such as stents, heart valves, knee and hip implants,” Shah adds.

In the Union Budget 2023, the budgetary allocation for the healthcare sector was ₹89,160 crore, less than a 3% increase from the previous year's ₹86,606 crore allocation. The FM announced to set up one hundred and fifty-seven new nursing colleges in co-location with the existing 157 medical colleges established since 2014. Adding to it, the government announced a new programme to promote research and innovation through centres of excellence, and collaboration with ICMR laboratories.

Budget for pharma sector

Budget 2024: Will budget allocation for pharma sector increase this year?