All segments of the country's pharmaceutical industry were disappointed with the Union Budget as almost all of its suggestions were ignored by the finance minister. Small scale drugs units are extremely unhappy as many of them recently complied with the Schedule M norms at huge financial costs.

Pharmaceutical industry was expecting some major sops for research and development this time as there is an increased pressure on most units to spend on research with the introduction of the new patent rules.

One other expectation was reduction of the excise duty on drugs to 8 percent from 16 per cent. This was expected to bring down drug prices across the country. This has not happened.

Leaders of pharmaceutical industry from all over the country have expressed their anguish at the budget proposals.

Suresh Kare, President, Indian Drug Manufactures Association (IDMA): "We had urged the government to extend the weighted deduction to 10 more years and to be extended to our plants and new construction also apart from the equipments. But the suggestion was shot down. There is no talk of the excise duty reduction to 8 per cent from the existing 16 per cent. This would have stopped the migration of the SSIs to places like Baddi. The only suggestion they have taken is that of Fringe Benefit Tax (FBT). We had asked that physician's samples given to a medical representative should not be treated as a perquisite and charged FBT. The suggestion was taken." Our suggestion for excise cut to 8 per cent was rejected in the budget, added Kare.

Ranjit Shahani, President, OPPI, says, "We were expecting a signature Budget from the Finance Minister (FM) and he has disappointed us, particularly the Pharmaceutical Industry. There are few sops like reducing the Import Duty to 5% from 15% for 10 Anti-HIV/AIDS drugs & 14 anti-cancer drugs, and some life saving drugs being exempted from Excise Duty and CVD. The reduction in peak Import Duty from 15% to 12.5% is a welcome move. However, it has still not reached ASEAN level as promised, he says.

"Since discovery research is a lengthy and expensive process, we had recommended present R&D incentives to continue till 2017. However, there is no change from the cut off date of 2007. As regards Fringe Benefit Tax (FBT), we are happy to note that FBT on physician's samples and medical equipment given to doctors are exempted from FBT. We were hoping that Excise Duty on medicines would come down from 16% to 8% making medicines more affordable to the common man. However, Excise Duty on medicines remains unchanged. Overall, from the perspective of Pharmaceutical Industry the Union Budget 2006-2007 falls short of our expectations," he concluded.

DB Mody, chairman, Pharmexcil says, "There is no excitement in the budget. Everything happened as expected. The welcome move is the reduction in custom duty cut on Aids and anti-cancer drug. The duty cut on naphtha, intermediates and polymers is also good. The cut on import duty from 15 to 12 per cent is encouraging. We hope that as the power sector is benefited from this years' budget, it will create impact in other industries including pharma and the production could be increased. However, as far as pharma industry is concerned, its just an average budget, he concluded.

JS Shinde, General secretary, All India organization of Chemist& druggist (AIOCD) : It is not at all satisfactory, just poor budget. The duty cut on life saving and anti aids drugs is the only relief in the budget as far as pharma industry is concerned.

Habil Khorakiwala, president of Indian Pharmaceutical Alliance (IPA) and chairman Wockhardt Limited, termed the budget proposals as disappointing. He said, "As far as pharma industry is concerned, there are no surprises in the budget and totally disappointing. It is completely silent to our requirements. We had urged the government for weighted deduction of R&D to be extended for 10 more years. But the suggestion was spurned by the Government. Our suggestion for tax incentives for clinical trials conducted in India was also rejected. Government's decisions to eliminate leprosy and import duty cut to 12 per cent are however welcome."

Satish Reddy, managing director & COO, Dr Reddy's Laboratories: "Overall, it is a good budget, aiming for a 10 per cent GDP growth, which is quite commendable. It is focused on infrastructure development for the country, which is in the right direction and is laudable. But when we come to specifics of the pharma industry, we find there is very little in it for us.

Reduction in peak custom duties from 15 per cent to 12.5 per cent will bring down imported raw material costs, which is a positive sign for all. The FBT on free samples has been removed which is good as it was irrational to tax free samples given to Doctors which were in turn passed on to needy patients. However it is too small a change to make any great impact."

"With the patent regime on in India, its time the Government encouraged innovation and supported the Industry by announcing grants for Research & Development. In the past only announcements have been made but no action has ever happened on the special fund for R&D. We hoped for incentives to set up R & D centers in India. This would have created numerous spin-off benefits to help create a base for innovation in India. But Budget 2006 has been disappointingly silent on this aspect," he added.

Dr D B Gupta, Chairman, Lupin Limited: This year's budget is primarily focused on increasing the GDP growth to 8.1% for the FY'06-07. The reduction in the custom duty on 10 anti-aids, 14 anti-cancer drugs and certain life saving drugs to 5% is a clever move which will make these drugs available to patients at reasonable prices.

The increase in service tax to 12% will increase the operating cost on the other hand changes in the Fringe Benefit Tax (FBT) introduced last year that excludes expenses on free samples of medicines and of medical equipments distributed to the doctors are welcome.

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 Indian pharma industry to make its mark globally, he added.

Alok Saxena, director, international division, Elder Pharma says, "Our expectation was more. But the pharma industry was completely neglected in the budget. Our suggestions like excise duty on medicines from 16 to 8 per cent were completely rejected".

Mohan Bhandari, Chairman And Managing Director, Bilcare Ltd, The leading Indian pharma packaging company is extremely happy with the proposed duty cut on packaging machines to 5 per cent from 15 per cent. He is of the opinion that this will bring more scope to the pharma packaging sector and will upgrade the Indian quality on par with the global standard. "It's a recognition to the whole packaging industry in India. But it is unfortunate that there are no other packages for the pharma industry. Pharma industry should have been given the importance as the finance minister gave to the agriculture and food industry," he said.