INDIA'S 2006 BUDGET DISAPPOINTS DRUG INDUSTRY

India's pharmaceutical industry is largely disappointed by the 2006 budget report issued by the federal government, which ignored many of the industry's prior research and development (R&D) proposals. The report, released by the country's finance ministry early last week, made no reference to various industry requests — such as calls for more collaborative R&D practices, reduced taxes on research equipment and technologies, and the establishment of new medical education organizations.

This avoidance elicited a slew of criticism from many of the country's major drugmakers. D.B. Gupta, chairman of the drug firm Lupin, noted that "for the Indian pharma industry to lead the knowledge revolution, the government needs to implement regulations to support R&D. Unfortunately, the budget overlooks the deduction in R&D expenditure strongly suggested by the industry. R&D promotion should be of primary importance, as discovering new chemical entities will help the … pharma industry to make its mark globally."

Certain aspects of the report, however — such as its focus on expanding rural healthcare and its proposal to reduce customs duties on imported anti-cancer and anti-AIDS treatments to only 5 percent — have garnered praise. Speaking to this end, Orchid Chemicals Managing Director K. Raghavendra Rao commented that the "emphasis on rural development is laudable …The reduction in customs duty on … life-saving drugs is a good step." He added that "the removal of FBT (fringe benefit tax) on free medical samples should be welcomed … and reduction of FBT on travel is good for business on general."