The government must come up
with fresh incentives to boost research and development (R&D) activities in
the country, say drug majors. This is vital for the future of domestic
manufacturers who will compete with multinationals in the forthcoming
product patent regime, they contend.
In a pre-budget memorandum submitted to the government, the Indian Drug
Manufacturers' Association (IDMA) and the Organisation of Pharmaceuticals
Producers of India (OPPI) have suggested a host of measures that-they
vouch-would not only strengthen the R&D capabilities of domestic players but
would also encourage multinationals to use India as their research base.
The pharmaceutical associations have also demanded rationalisation of import
duty on bulk drugs, drug intermediates and raw materials and proposed
reduction of duty on clinical trial samples of new products and R&D
equipment. They have also sought an exemption from minimum alternate tax
(MAT).
The liability to MAT should be worked out on the basis of net profit as per
the profit and loss account, after adjustments are made to accommodate carry
forward losses and unabsorbed depreciation, suggests the OPPI.
The industry is also pressing for removal of import duty of 35 per cent on
reference standards and equipment used for testing in research units.
Vaccines attract very steep duty rate, as a result of which a substantial
segment of the Indian population cannot afford these. The OPPI has
recommended a cut on this front, too.
At a meeting organised by the Confederation of Indian Industry (CII)
National Committee on Drugs, industry captains also stressed the need to
bring the new pharma R&D facilities within the ambit of the 10-year tax
holiday scheme.
SmithKline
Beecham
gearing up for battle royal
WHILE product patent laws are slated to come into force only in 2005,
controversies surrounding alleged patent rights violation have already begun
surfacing in India. British pharmaceuticals giant SmithKline Beecham has
threatened to file petitions against three leading Indian drug manufacturers
with the Indian Patent Control Office, charging them with violation of
patent norms. Sun Pharmaceuticals, Dr Reddy's Laboratories and Torrent
Pharma are the companies which stand accused.
The bone of contention is Rosigliatazone, an anti-diabetic bulk medicine,
which is an original research product of SmithKline. The company has applied
for Exclusive Marketing Rights (EMR) on the drug and is still waiting for
official approval. The EMR provision is an interim measure that allows the
applicant to market patented drugs on an exclusive basis.
Meanwhile, much to SmithKline's chagrin, the three domestic players launched
their own reverse-engineered versions of Rosigliatazone formulations in the
Indian market.
The perturbed SmithKline has decided to take legal action against the
alleged offenders once the patent office puts its stamp of approval on the
EMR application.
The Indian drug manufacturers, represented by the Indian Pharmaceutical
Alliance, have however, denied the charges. They have pointed out that as
per the rules set down in the Trade Related Intellectual Property Rights
(TRIPS) chapter of the World Trade Organisation (WTO), the Indian government
is obliged to grant EMRs for drugs patented after January 1, 1995.
Rosigliatazone was launched prior to this date and hence SmithKline does not
qualify for patent protection. Both parties are now awaiting a decision from
the Indian patent office.
Meanwhile, the controversy has set the alarm bells ringing in certain
quarters. Global pharmaceutical giants which have been planning to outsource
research to Indian manufacturing companies-attracted by the low cost of
production here-are now reviewing their strategy.
For example, Novartis Pharma, the Swiss multinational, has expressed doubts
about the country's commitment towards the WTO norms. India is giving out
mixed signals, complains the company; which is already in the process of
outsourcing e-business solutions.
It has urged the government to take immediate steps to dispel all doubts
surrounding the patent law.
Tough import regulations in the offing
IN a determined bid to block import of substandard drugs, the government is
in the process of formulating a set of stringent regulations. It has issued
a notification which stipulates that all importers will have to undergo a
stringent registration process. They will be required to pay fees ranging
from US$100 to US$ 1,500 and furnish detailed information on the products
being imported.
At present, the registration norms are extremely flexible and the fees
charged are nominal. Tougher regulations are expected to act as a non-tariff
barrier.The industry has wholeheartedly approved of the move taken by the
government. Currently, the country is flooded with made-in-China drugs of
inferior quality, say domestic players.
While 'dumping' duty has been levied on some of these products, the flow
remains unchecked. The government has, therefore, taken a move in the right
direction, says the industry.
The notification is, presently, being examined by the three key industry
associations, IPA, OPPI and IDMA. They may propose changes and modifications
within 45 days from the date of its publication. The norms will be made
mandatory after that period.
Optimistic
predictions for pharma exports
THE pharmaceuticals and chemicals sector will come up with satisfactory
performance on the exports front in the current fiscal, predicts the
Mumbai-based Basic Chemicals, Pharmaceuticals and Cosmetics Promotion
Council (Chemixil). According to the latest figures released by Chemixil,
the sector netted Rs 6,908 crores in export-posting a 32 per cent jump-
during the first five months of the 2000-2001 fiscal year, as compared to
the corresponding period in the previous year.
The industry is well on its way of achieving the export target of Rs 17,150
crores set for this year, predicts Chemixil. Exports to new markets and
product launches have contributed substantially to this healthy growth rate,
says Ramu S Deora, chairman, Chemixil.