|
Increase in allocation to the health sector by 15% over 2007-08. |
|
Allocation to the National Rural Health Mission (NRHM) increased to Rs 12,050 crore. |
|
Provision of Rs 993 crore to the National Aids Control Programme and allocation of Rs 1,042 crore for the eradication of polio with focus on high risk districts in Uttar Pradesh and Bihar. |
|
Customs duty to be reduced from 10% to 5% on certain specified life saving drugs and on bulk drugs used for their manufacture. These drugs are also exempted from excise duty or countervailing duty. |
|
Excise duty on all goods produced in the pharmaceutical sector reduced from 16% to 8%. |
|
Anti-AIDS drug, 'Atazanavir', as well as bulk drugs for its manufacture to be exempted from excise duty. |
|
In order to promote outsourcing of research, weighted deduction of 125% on any payment made to companies engaged in R&D. |
|
Increase in allocation to the healthcare sector is a positive given the need to ramp up the healthcare infrastructure in the country and improve the accessibility of quality healthcare to a larger section of the population. |
|
Reduction of excise duty from 16% to 8% is a positive for all pharma companies enabling them to boost profitability going forward given that the excise duty is being paid on MRP. |
|
Increased allocation of funds for eradication of HIV/AIDS and polio and reduction in customs duty on certain life saving drugs from 10% to 5% is a positive for companies having product pipeline catering to these segments. |
|
Weighted deduction of 125% on payments made for outsourcing research services is a positive for the sector as a whole given that the emphasis on R&D has increased. |
|
Reduction of excise duty from 16% to 8% is a positive for all pharma companies namely domestic companies such as Cipla, Ranbaxy and the likes and MNC pharma companies such as GSK Pharma, Pfizer and Aventis. |
|
Emphasis on allocating funds for the eradication of HIV/AIDS and polio is a positive for Cipla (which has a strong presence in the manufacture of anti-AIDS drugs) and Panacea Biotec (which largely manufactures oral polio vaccines). |
|
Weighted deduction of 125% on payments made for outsourcing research services is a positive for R&D focused companies such as Ranbaxy and Nicholas Piramal. |
FICCI's wishlist
|
|
Rationalisation of excise duty from the current 16% to 8% in a bid to make medicines more affordable.
| |
Weighted deduction benefit of 150% on R&D expenditure incurred should be extended for another 5 years i.e. upto March 2017. The same should also be increased to 200%.
|
|
The scope of weighted deduction should be extended to include all expenditure incidental to basic research carried on at any outside R&D facility, as also clinical trials, bio-equivalence studies that are done outside the R&D facility whether in India or in any foreign country.
|
|
All life saving drugs to be exempted from customs duty so that they are available to patients at reduced prices. |
| Budget 2005-06 |
|
Budget 2006-07 |
|
Budget 2007-08 |
|
|
|
|
|
|
Corpus for the R&D fund to be increased in phases. Stable policy environment and incentives to be provided to help the two industries become world leaders.
Units in knowledge-based industries such as pharma and biotech to be provided equity support through the SME Growth Fund.
The exemption date for weighted deduction of 150% of in-house R&D facilities of pharmaceutical and biotechnology companies has been extended by 2 years to March 31, 2007.
Also, the exemption for 100% deduction of profits of companies carrying on scientific R&D, which is approved by the Department of Scientific and Industrial Research has also been extended by 2 years to March 31, 2007.
Custom duty for 9 specified pharma and biotechnology machinery cut to 5%.
Corporate tax pruned to 30% from 35%.
|
|
Reduction of customs duty on 10 anti-AIDS and 14 anti-cancer drugs to 5%. Reduction of duty on certain life saving drugs, kits and equipment from 15% to 5%. These drugs will also be exempt from excise duty and countervailing duty (CVD).
Expenses on free samples of medicines and medical equipment distributed to doctors exempt from fringe benefit tax.
Increased allocation for health and family welfare by 22%.
|
|
Reduction in general rate of import duty on medical equipment to 7.5%.
Section 35(2AB) that allows a weighted deduction of 150% for expenditure relating to in-house research and development extended for five more years, until March 2012.
Life saving vaccines exempt from excise duty.
Free samples not under the purview of fringe Benefit Tax.
Clinical trial of new drugs exempt from service tax to make India a preferred destination for drug testing.
Provision of Rs 9.7 bn for AIDS control programme.
Provision of Rs 13 bn in FY08 for increasing the number of polio rounds and vaccines to be introduced with intensive coverage in the 20 high risk districts of Uttar Pradesh and 10 districts of Bihar.
|
| [Read more on Budget 2005-06] |
|
[Read more on Budget 2006-07] |
|
[Read more on Budget 2007-08] |
|
| Key Positives |
|
| Strong generic fundamentals - Despite the pricing pressure witnessed in the generic markets of US and Europe, the fundamental factors driving the generics industry remain strong. In the US and Europe, the aged population as a percentage of total population is on the rise and is expected to rise further by 2025 resulting in a strain in the healthcare budgets. To give a perspective, the ageing population of Europe (as a percentage of regional population) is expected to rise from the current 20% to around 26% by 2025. Similarly that of the US is expected to rise from the current 16% to around 25% by 2025 (Source: Ranbaxy presentation). At the same time, the governments in these regions are under pressure to reduce healthcare costs, which can be achieved through relatively cheaper generics. |
| Cost competitiveness - A new concept that is gaining momentum in the pharma industry is contract research apart from contract manufacturing. Given the low cost high quality advantages, Indian companies are poised to benefit from contract research business on behalf of multinationals. As for contract manufacturing, large global pharmaceutical companies are finding it profitable to outsource production. To cash in on these opportunities, many large production houses in the country are becoming US FDA compliant. To put things in perspective, excluding US, India currently has the highest number of US FDA approved plants at 75. |
| Structural changes - The penetration of health insurance is abysmally low in the country. The entry of private players would not only bring in quantum leap in the health insurance business but also increase capital inflows into this sector. It would also bring in the concept of managed healthcare in the country. This would finally lead to overall increase in per-capita usage of drugs. |
| New growth opportunities - In spite of the price war, the domestic pharma industry continues to show decent growth rates, led by the chronic therapeutic (lifestyle) segments like anti-diabetic, cardiovascular and central nervous system. Higher awareness, exposure to newer therapies and aggressive introduction of new drugs at a reasonable price has been the key driver of growth in the chronic/lifestyle segment. This trend is likely to continue going forward. |
| Increasing R&D focus - One of the positive developments has been the shift towards product patent regime from 2005 onwards. This will lead to a structural change in the industry, which will encourage innovation and greater investment in R&D. While there would not be any impact in the short term, in longer term this will lead to strengthening and consolidation of the industry. Companies have been increasingly stepping up their R&D expenditure in a bid to be recognised as research and discovery oriented companies in the global arena from a long-term perspective. Hiving off the R&D division into a separate company is gaining momentum of late as a strategy to de-risk the core business model, secure funding for the hived off R&D entity and thereby unlock value for the shareholders. |
| |
| Key Negatives |
|
| Lower end of value chain - Indian companies are cost competitive in manufacturing bulk drugs, which has made them an outsourcing destination for the global pharma majors. But this is the lower end of the pharma value chain and is basically a commodity making skill due to low entry barriers. Also, the Indian industry still lacks facilities and resources to develop a molecule, conduct clinical trials and then launch the product. Indian companies will thus have to depend on their international peers to undertake the more expensive clinical trials and product launches. |
| Weakness in domestic markets - Fierce price competition has become the order of the day for the domestic pharma industry, which has restricted the ability of the domestic pharma market to grow in value terms. Due to its highly fragmented structure, the pricing power of the players has been pruned. The Indian markets have traditionally been and continue to remain price sensitive and premium pricing of products is extremely difficult to maintain. |
| Challenging generics environment - Competition in the US and European generics market has intensified in the past couple of years on the back of increased competition leading to brutal price erosion. While the product flow is set to increase in the coming couple of years, pricing pressure is expected to continue. Generic players also have to contend with a host of other challenges such as increased difficulty in securing Para IV wins, presence of authorised generics and making the right acquisition to acquire scale and effectively compete in the market. |
| Impact of the patent regime - The new patent regime brings in lot of promises for the industry in India, but it might not be good for the smaller players in the industry, as they will not be able to survive in the environment leading to consolidation of the industry. Also, the introduction of this law will gradually lead to a slowdown of new product launches from domestic pharma majors in the Indian markets. At the same time, the law provides an attractive opportunity to MNC pharma companies to step up product launches from their parent's product stable thereby providing competition to their domestic peers. Having said that, the going may not be that easy for the MNC players as the patented products launched in India will most likely be subject to price negotiation. |
| Government control - This attribute simply refuses to go away, despite all the overall moves to liberalise the industry. DPCO still continues. |
|
|
|
|
|
|
|
| Sector Performance |
|
| COMPANY |
PRICE (Rs) |
|
| AARTI DRUGS |
503.8
(0.7%) |
|
| AASHKA HOSPITALS |
78.7
(0.0%) |
|
| AATMAJ HEALTHCARE |
47.0
(-4.2%) |
|
| ABBOTT INDIA |
25,864.9
(0.8%) |
|
| ACCENT MICROCELL LTD. |
266.7
(-0.5%) |
|
| ACHYUT HEALTHCARE |
50.8
(13.7%) |
|
| ADESHWAR MEDITEX |
27.7
(-7.7%) |
|
| ADLINE CHEM LAB |
27.3
(-5.0%) |
|
| ADVANCED ENZYME TECHNOLOGIES |
391.5
(1.5%) |
|
| AJANTA PHARMA |
2,200.7
(2.8%) |
|
| ALBERT DAVID |
1,191.5
(1.6%) |
|
| ALEMBIC |
94.2
(-0.7%) |
|
| ALEMBIC PHARMA |
990.7
(-0.7%) |
|
| ALKEM LABORATORIES |
4,901.5
(0.6%) |
|
| ALPA LAB |
97.0
(0.3%) |
|
| AMBALAL SARABHAI |
46.8
(-2.5%) |
|
| AMI ORGANICS |
1,213.3
(-0.6%) |
|
| ANG LIFESCIENCES INDIA |
57.2
(-0.3%) |
|
| ANUH PHARMA |
255.6
(1.6%) |
|
| ARTEMIS MEDICARE SERVICES |
184.8
(1.1%) |
|
| ASHRAM ONLINE |
6.6
(-0.5%) |
|
| ASPIRA PATHLAB & DIAGNOSTICS |
31.6
(-2.1%) |
|
| ASTER DM HEALTHCARE |
359.0
(-2.0%) |
|
| ASTRAZENECA PHARMA |
5,415.4
(1.5%) |
|
| AUROBINDO PHARMA |
1,131.2
(2.5%) |
|
| BAFNA PHARMA |
87.8
(1.0%) |
|
| BAJAJ HEALTHCARE |
327.0
(-0.5%) |
|
| BAL PHARMA |
100.2
(1.8%) |
|
| BALAXI PHARMA |
585.0
(1.7%) |
|
| BALAXI PHARMA |
585.0
(1.7%) |
|
| BETA DRUGS |
1,306.4
(-2.9%) |
|
| BHARAT PARENTALS |
1,706.0
(0.3%) |
|
| BIOCON |
307.0
(5.3%) |
|
| BIOFIL CHEMICALS |
69.8
(-1.7%) |
|
| BLISS GVS PHARMA |
122.6
(5.0%) |
|
| BRAWN BIOTECH |
22.5
(5.0%) |
|
| BROOKS LAB |
108.9
(2.0%) |
|
| CAPLIN POINT |
1,350.5
(-0.5%) |
|
| CHANDRA BHAGAT PHARMA |
114.9
(2.8%) |
|
| CHEMO PHARMA |
85.2
(3.2%) |
|
| CHOKSI LAB. |
66.5
(2.0%) |
|
| CIAN HEALTHCARE |
21.2
(0.3%) |
|
| CIPLA |
1,409.4
(0.3%) |
|
| CLARIS LIFESCIENCES |
396.6
(0.0%) |
|
| CONCORD BIOTECH |
1,657.5
(1.2%) |
|
| CONCORD DRUGS |
36.6
(-0.7%) |
|
| DECCAN HEALTH CARE |
25.1
(0.0%) |
|
| DECIPHER LABS |
16.2
(-1.6%) |
|
| DENIS CHEM LAB |
175.6
(-1.5%) |
|
| DESH RAKSHAK |
7.3
(4.9%) |
|
| DHANVANTRI JEEV |
20.9
(-1.7%) |
|
| DIPNA PHARMACHEM |
9.5
(-1.6%) |
|
| DISHMAN CARBOGEN AMCIS |
229.5
(-1.7%) |
|
| DIVIS LABORATORIES |
4,025.4
(4.8%) |
|
| DR HABEEBULLAH LIFE SCIENCES |
17.4
(4.5%) |
|
| DR LALCHANDANI LABS |
20.8
(-0.1%) |
|
| DR REDDY NCD1 |
5.4
(0.4%) |
|
| DR. LAL PATHLABS |
2,387.1
(2.4%) |
|
| DR. REDDYS LAB |
6,253.3
(0.6%) |
|
| EARUM PHARMACEUTICALS |
1.6
(-1.8%) |
|
| ERIS LIFESCIENCES |
892.6
(1.2%) |
|
| EVEREST ORGANICS |
132.7
(1.5%) |
|
| FABINO LIFE |
29.1
(-5.0%) |
|
| FDC |
455.8
(-0.2%) |
|
| FERMENTA BIOTECH |
176.6
(-2.9%) |
|
| FERVENT SYNERGIES |
16.5
(5.0%) |
|
| FORTIS MALAR |
82.6
(5.0%) |
|
| FREDUN PHARMA |
845.8
(0.2%) |
|
| GANGA PHARMACEUTICALS |
23.5
(-3.7%) |
|
| GENNEX LAB. |
16.1
(-1.2%) |
|
| GLAND PHARMA |
1,729.1
(-0.6%) |
|
| GLENMARK LIFE SCIENCES |
813.9
(8.2%) |
|
| GLENMARK PHARMA |
1,080.1
(0.1%) |
|
| GRANULES INDIA |
424.3
(1.6%) |
|
| GSK PHARMA |
2,132.8
(3.3%) |
|
| GUFIC BIOSCIENCE |
327.7
(2.3%) |
|
| GUJ.TERC LAB |
64.8
(-2.0%) |
|
| HEALTHCARE GLOBAL ENTER. |
350.0
(-2.3%) |
|
| HEMANT SURGICAL INDUSTRIES |
142.0
(1.0%) |
|
| HESTER BIOSCIENCES |
1,689.8
(1.8%) |
|
| HIKAL. |
312.3
(1.2%) |
|
| IND SWIFT LA |
124.8
(0.3%) |
|
| IND. SWIFT |
24.7
(5.0%) |
|
| INDOCO REMEDIES |
328.6
(1.3%) |
|
| INDRAPRASTHA MEDICAL |
262.3
(-1.1%) |
|
| INNOVA CAPTAB LTD. |
467.6
(-1.6%) |
|
| INTRA INFOTECH |
52.6
(-1.6%) |
|
| IOL CHEMICALS & PHARM. |
399.5
(-0.6%) |
|
| IPCA LABS |
1,338.6
(0.8%) |
|
| ISTREET NETWORK |
2.0
(-4.9%) |
|
| J.B.CHEMICALS |
1,864.1
(0.5%) |
|
| JAGSON PHAR |
345.6
(4.0%) |
|
| JEENA SIKHO |
1,075.5
(3.1%) |
|
| JFL LIFE SCIENCES LTD. |
45.0
(4.7%) |
|
| JUBILANT INDUSTRIES |
1,187.5
(-0.6%) |
|
| JUBILANT PHARMOVA |
680.7
(0.6%) |
|
| KABRA DRUGS |
7.2
(0.0%) |
|
| KILITCH DRUGS |
358.6
(2.2%) |
|
| KIMIA BIOSCIENCES |
51.6
(-0.5%) |
|
| KIMS |
1,998.8
(-1.0%) |
|
| KOPRAN. |
254.9
(-2.0%) |
|
| KOVAI MEDICAL |
4,193.4
(1.0%) |
|
| KREBS BIOCHEMICALS |
73.0
(2.6%) |
|
| KRSNAA DIAGNOSTICS |
564.5
(-1.2%) |
|
| KWALITY PHARMA |
507.0
(1.4%) |
|
| LACTOSE INDIA |
168.5
(0.0%) |
|
| LASA SUPERGENERICS |
25.5
(-0.2%) |
|
| LAURUS LABS |
437.1
(2.8%) |
|
| LINCOLN PHAR |
597.7
(-0.3%) |
|
| LINK PHARMA |
43.6
(-2.9%) |
|
| LOOKS HEALTH SERVICES |
6.1
(5.0%) |
|
| LUPIN |
1,615.9
(1.3%) |
|
| LYKA LABS |
123.4
(-2.5%) |
|
| MANGALAM DRUGS |
100.6
(-0.1%) |
|
| MANKIND PHARMA |
2,368.3
(-1.3%) |
|
| MARKSANS PHARMA. |
172.2
(3.2%) |
|
| MAX HEALTHCARE INSTITUTE |
802.4
(-0.1%) |
|
| MEDI CAPS |
52.0
(-0.1%) |
|
| MEDICAMEN BI |
491.3
(17.1%) |
|
| MEDICO REMEDIES |
46.6
(-0.7%) |
|
| MERCURY LAB. |
894.0
(2.1%) |
|
| METROPOLIS HEALTHCARE |
1,805.6
(2.1%) |
|
| MOREPEN LABS |
51.0
(1.8%) |
|
| NARAYANA HRUDAYALAYA |
1,275.9
(0.7%) |
|
| NATCO PHARMA |
1,031.3
(0.9%) |
|
| NECTAR LIFESCIENCE |
35.2
(3.1%) |
|
| NEULAND LABS |
6,983.9
(-1.9%) |
|
| NIDAN LABORATORIES |
30.2
(-1.5%) |
|
| NORRIS MEDICINES |
12.7
(-1.9%) |
|
| NOVARTIS |
1,055.1
(0.9%) |
|
| NURECA |
286.0
(-1.0%) |
|
| ORCHID PHARMA |
1,084.8
(-0.8%) |
|
| ORTIN LABS |
19.9
(0.7%) |
|
| PANACEA BIOTECH |
144.0
(-1.5%) |
|
| PANCHSHEEL ORG |
203.8
(-0.4%) |
|
| PARMAX PHARMA |
29.8
(1.7%) |
|
| PARNAX LAB |
130.3
(0.6%) |
|
| PATIDAR BUILDCON |
8.3
(-10.0%) |
|
| PFIZER |
4,195.2
(1.5%) |
|
| PHAARMASIA |
40.4
(2.1%) |
|
| PIRAMAL ENTERPRISES |
925.1
(1.9%) |
|
| PIRAMAL PHARMA |
142.3
(0.2%) |
|
| PREVEST DENPRO |
420.6
(-2.7%) |
|
| PROCTER & GAMBLE HEALTH |
4,724.4
(0.1%) |
|
| RAYMED LABS |
2.4
(0.0%) |
|
| RPG LIFE SCIENCES |
1,567.5
(1.2%) |
|
| RUBRA MEDICA |
10.0
(0.0%) |
|
| S.S.ORGANICS |
39.7
(4.7%) |
|
| SANOFI INDIA |
8,278.1
(1.6%) |
|
| SAROJA PHARMA INDUSTRIES INDIA LTD. |
42.3
(-1.7%) |
|
| SCANDENT IMAGING |
7.9
(1.5%) |
|
| SEQUENT SCIENTIFIC |
125.0
(0.1%) |
|
| SHALBY |
279.4
(-1.6%) |
|
| SHAMROCK IND |
12.6
(3.3%) |
|
| SHELTER PHARMA |
57.0
(-3.3%) |
|
| SHILPA MEDICARE |
545.5
(2.9%) |
|
| SHREE GANESH REMEDIES |
630.7
(0.9%) |
|
| SHUKRA PHARMA |
93.4
(2.0%) |
|
| SHYAMA INFOSYS |
7.0
(-0.3%) |
|
| SIGACHI INDUSTRIES |
66.8
(-0.9%) |
|
| SMRUTHI ORGANICS |
153.4
(-3.2%) |
|
| SMS LIFESCIENCES INDIA |
672.4
(-0.9%) |
|
| SMS PHARMA |
207.9
(-0.3%) |
|
| SOLARA ACTIVE PHARMA SCIENCES |
541.7
(-3.2%) |
|
| SONI MEDICARE |
26.0
(-7.9%) |
|
| SOTAC PHARMACEUTICALS LTD. |
124.1
(0.0%) |
|
| SOURCE NATURAL FOODS |
86.7
(-1.4%) |
|
| STRIDES PHARMA SCIENCE |
876.5
(-0.7%) |
|
| SUN PHARMA |
1,504.3
(-1.1%) |
|
| SUNIL HEALTHCARE |
84.5
(5.0%) |
|
| SUPRIYA LIFESCIENCE |
410.6
(-0.7%) |
|
| SUVEN LIFE SCIENCES |
111.5
(-1.5%) |
|
| SUVEN PHARMACEUTICALS |
657.9
(2.0%) |
|
| SWAGRUHA INFRA |
5.5
(1.9%) |
|
| SYNCOM FORMULATIONS |
13.8
(0.2%) |
|
| SYNGENE INTERNATIONAL |
698.3
(-0.1%) |
|
| TARSONS PRODUCTS |
462.7
(0.3%) |
|
| TEJNAKSH HEALTHCARE |
24.8
(0.4%) |
|
| THEMIS MEDICARE |
216.3
(2.8%) |
|
| THYROCARE TECHNOLOGIES |
651.7
(-1.3%) |
|
| TOHEAL PHARMA |
103.4
(-0.0%) |
|
| TORRENT PHARMA |
2,690.5
(-0.1%) |
|
| TRIDENT LIFELINE |
165.0
(-6.3%) |
|
| TRIMURTHI DRUGS |
17.2
(0.0%) |
|
| TTK HEALTHCARE |
1,587.8
(-1.1%) |
|
| UNICHEM LAB |
592.8
(2.2%) |
|
| VADIVARHE SPECIALITY CHEMICALS |
41.0
(0.0%) |
|
| VAIDYA AYURVEDIC LABS |
200.6
(-2.7%) |
|
| VALIANT LABORATORIES LTD. |
157.1
(-0.7%) |
|
| VANTA BIOSCIENCE |
63.0
(2.4%) |
|
| VASA DENTICITY |
555.3
(7.0%) |
|
| VASUNDHARA RASAYANS |
217.7
(-1.5%) |
|
| VENUS REMEDIES |
328.3
(0.1%) |
|
| VIJAYA DIAGNOSTIC |
700.4
(1.4%) |
|
| VILIN BIO MED |
21.0
(5.0%) |
|
| VINEET LABORATORIES |
56.0
(2.0%) |
|
| VIVANZA BIOSCIENCES |
8.1
(1.3%) |
|
| VIVIMED LABS |
4.9
(-3.9%) |
|
| WALPAR NUTRITIONS LTD. |
126.0
(5.0%) |
|
| WANBURY |
157.2
(-0.9%) |
|
| WELCURE DRUG |
4.9
(0.0%) |
|
| WINDLAS BIOTECH |
546.2
(-0.7%) |
|
| WOCKHARDT |
579.5
(1.6%) |
|
| WYETH |
1,334.6
(-2.3%) |
|
| YATHARTH HOSPITAL |
450.5
(1.3%) |
|
| ZENITH DRUGS LTD. |
62.9
(-2.0%) |
|
| ZENLABS ETHICA |
45.2
(5.0%) |
|
| ZIM LABORATORIES |
122.3
(-1.6%) |
|
| ZOTA HEALTH CARE |
485.0
(-0.3%) |
|
| ZYDUS LIFESCIENCES |
947.9
(-0.3%) |
|
|
|
