Deloitte Touche Tohmatsu India Private Ltd considers that the slow down ensuing from the control by the Competition Commission of India (CCI) will hamper the growth of pharma industry in the coming years.

Deloitte thus thus has called upon the government to reconsider its move to allow foreign direct investment (FDI) in pharma sector. “There should be a relook at the FDI norms as this added control from the CCI will adversely impact investor sentiments and slowdown merger & acquisition activity in the future,” Anjan Sen, director, Strategy & Operations, Deloitte India told Pharmabiz in an email interaction.

In order to attract FDI, the government should provide the much-needed  encouragement to the industry by setting up comprehensive pharmaceutical hubs that will focus on research and manufacturing, on similar lines like that of Biopolis in Singapore among other similar facilities in the Asia Pacific region and European Union. In addition, Indian scientists working abroad and interested in returning should be given tax incentives for 5 to 10 years as is given to corporate sector, he said.

Therefore in the Union Budget 2012, the government would need to address these issues. There can be other mechanisms considered to prevent monopolistic situations and prevent potential rise of prices of medicines, he added.

Another point is that the Pharmaceutical Policy has been pending for some time and it is high time the same is finalized. The pricing control that has been suggested will severely impact the growth of the industry. The sector needs a price monitoring mechanism to keep prices under control.

Going by the stringent regulatory norms in less regulated markets, the government should look at the implementation of Good Manufacturing Practice (GMP) norms so that quality medicines are available to the people of India and also make exported products more acceptable to the regulated markets.

When the global pharma growth is in a subdued phase, government should offer additional incentives for R&D programme in the pharmaceuticals and biotech sector to encourage local innovation.

“We are of the view that the Centre should exempt expenditure on import of all capital goods, raw material and consumable to be used for R&D purposes from custom duty, including reference standards, besides making CENVAT credit available on capital goods used for R&D to reduce research cost,” stated the Deloitte India Director, Strategy & Operations.

Among the much awaited government initiatives expected through the Budget 2012 would be the weighted deduction under section 35(2AB) be extended to the expenditure incurred by pharmaceutical companies outside approved R&D facilities This should cover  clinical trials, bioequivalence studies conducted in overseas CROs and regulatory and patent approvals, which are directly related to R&D.

As part of its efforts to help increase revenues to its exchequer, the government should enhance export incentives on drug shipments which would allow Indian pharmaceutical companies to compete with China, he pointed out.