The new pharmaceutical policy will have provisions to broaden the R&D definition to help the industry cover majority of the R&D expenditure, besides Rs. 500 crore technology upgradation funds for the small and medium scale companies to upgrade their infrastructure.

The policy would define R&D to cover depreciation in investment made in land and building for dedicated research facilities, expenditure incurred for regulatory approvals and filings of patents abroad, clinical trial expenses, besides other fiscal incentives to be granted for a period of about 10 years.

“Pharma companies could cover majority of their R&D expenses availing the Rs. 150-crore annual drug R&D fund (Pharmaceuticals Research and Development Support Fund) announced by the government,” said G S Sandhu, joint secretary, Department of Chemicals and Petrochemicals.

Talking to Pharmabiz on the sidelines of the annual day celebrations of Indian Drug Manufacturers Association in Mumbai, last week, he said that the pharmaceutical policy would not include the time frame and details of the much debated data exclusivity issue.

“This is dealt by a different committee (data exclusivity committee) and we will decide the timeframe later” said Sandhu, adding that the policy would however touch upon some key aspects related to drug pricing and patents.

When asked whether the policy would define new chemical entities (NCE) by including derivatives like salts, esters, polymorphs, combinations or novel drug delivery systems (NDDS) and bring it within the purview of data protection, he said that there would be some provisions and that they were exploring options.

Sandhu said that the pharmaceutical policy would announce a Rs. 500 crore Pharmaceutical Technology Upgradation Fund (PRUF) for the small and medium scale sector considering the modernisation requirements of the segment with a 5 per cent interest subsidy. As Pharmabiz reported earlier, the decision to set up PRUF has come in the wake of the changes in the IPR regime, amendments in Schedule M of Drugs and Cosmetics Act and modifications in the central excise duty structure. The sub group of National Manufacturing Competitiveness Council (NMCC) that looked into the problems of the pharmaceutical industry had also suggested the setting up of a Rs. 500 crore technology upgradation assistance scheme for the small and medium scale industries in the sector.

Sandhu said, “Recommendation to reduce excise duty from 16% to 8% in order to nullify the imbalances and advantages offered to units in excise free zones, elimination of all taxes on HIV/cancer drugs, MRP on drugs inclusive of all taxes to be effected from 1st April 2006. Setting up of a Settlement Commission, setting up of a public awareness fund etc. would be other highlights of the policy.”