Indian Pharmaceutical Alliance (IPA), the apex body representing domestic pharma companies, is up in arms against the government’proposed action plan to boost drug exports. The department of pharmaceuticals (DoP) has proposed funding by venture capitalists (VCs), service tax exemptions, import duty waiver on pharmaceutical products and protection to clinical test data to boost exports.
But the measures suggested by the department in the action plan could become“counter-productive” for the industry, IPA secretary-general DG Shah said in a letter to a senior DoP official, who heads a team implementing it. The team implements an export promotion strategy prepared by the ministry of commerce.
In regulated markets such as the US and the UK, companies have to get their products registered by filing regulatory dossiers, which are costly to prepare. It is difficult for small enterprises to meet this cost. To help them, the DoP team has recommended an “alliance initiative between domestic companies funded through a venture capital concept”. The working group also recommended service tax exemption in “the field of clinical development and data management” that may encourage more business in clinical research in India.
“Introducing VCs to finance dossier development will prove counter-productive for our own industry,” Mr Shah said. IPA fears that such funding initiatives for mere registration could take away the advantage of Indian companies as small companies without sales and marketing infrastructure in the overseas markets may tend to license their registrations to foreign companies.
“The idea of VCs is not suitable for SMEs that have a low turnover. VCs look for companies with bigger margins and bigger profits and they would not support a small-scale industry that has a turnover of Rs 5-10 crore. Hence, the plan would not impact our competitiveness in foreign markets,” Small Pharmaceutical Industry Confederation vice-chairman Lalit Kumar Jain said.
“We will discuss the issue with the industry and then do the needful. Our intention is to facilitate exports, we do not intend to take any measures against the industry,” said a DoP official, who wished not to be named.