The Visible Hand: Government Supports the Biopharmaceutical Industry - The Indian government is providing several incentives for local biopharmaceutical companies to grow and compete globally. - BioPh

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The Visible Hand: Government Supports the Biopharmaceutical Industry
The Indian government is providing several incentives for local biopharmaceutical companies to grow and compete globally.


BioPharm International
Volume 21, Issue 8

NURTURING COMPANIES

The DBT is also funding several programs to help push innovations out of academic laboratories and into production. These include:4

  • The Biotechnology Industry Partnership Program. This is a technology-transfer scheme, in which the DBT will connect Indian biotech companies with suitable research laboratories, and will help to manage patenting and other IP-related issues as research findings are translated into marketable products.
  • The Biotechnology Industry Research Assistance Council. This council will help small and medium biotech firms to grow and compete globally. Provisions include lending assistance and support for international patenting costs.
  • Expansion of the Small Business Innovation Research Industry Scheme. An existing scheme by which the DBT provides financial and other assistance to fledgling biotech firms.
  • A National Biotechnology Regulatory Authority. A national authority to be in place by 2009 and to act as a single-window regulator for the biotech industry.5

TAX BREAKS

The Indian tax system is complex and evolving, but currently the local biopharmaceutical industry enjoys a host of actual and potential tax breaks. Among these are:6
  • Exemption from customs and excise taxes for all drugs and materials imported or produced domestically for clinical trials, and for certain biotech-related research and development (R&D) equipment.
  • A low rate of customs duty (5%) for most R&D equipment.
  • 10-year deduction of all profits and gains for companies conducting R&D approved by the Indian Scientific and Industrial Research Organization (SIRO) before March 31, 2005.
  • Continuing tax exemptions for venture-capital funds that invest in biotech companies.7

SPECIAL ECONOMIC ZONE BENEFITS

In 2006, India's legislature passed the SEZ Act to promote both local and foreign investment, boost the influx of know-how from the West, and foster India's export sector. In principle, any company or group of companies may set up a SEZ on its own. The DBT is helping to finance the establishment of several biotechnology parks with SEZ status before 2010.

The benefits of SEZ status include:8

  • 100% foreign-equity investment permitted for manufacturing all drugs except recombinant-DNA products and cell-targeted therapies
  • Customs and excise duty exemption to companies recognized by SIRO
  • 150% tax deduction on R&D expenditures
  • 3-year excise-duty waiver on patented products.

OTHER ASSISTANCE AT THE NATIONAL-LEVEL

Public funding for biopharma-related research in India comes from a variety of sources. The DBT is one of the largest contributors, and others include:8

  • The Technology Development Board
  • The Department of Scientific and Industrial Research
  • The Council of Scientific and Industrial Research
  • Department of Science and Technology
  • Indian Council of Medical Research
  • University Grants Commission

Biopharmaceutical industry suppliers also recognize that government support provides a level of stability, which leads to increased local investments. "The Indian government has encouraged an open-door policy with industry leaders," said Vinay Joban, general manager at Pall Life Sciences, Pall India. "The government has created excise-free zones to encourage pharmaceutical and biotechnology growth, and Pall and others are establishing new facilities and expanding existing facilities to meet international regulatory cGMP guidelines."

STATE-LEVEL ASSISTANCE

In the recent years, India's state governments, much like those in the US, have been competing for biopharmaceutical business by providing incentives to would-be investors. These incentives include tax breaks, seed money, concessional pricing for land, subsidies for utilities and patent costs, and the promise of a single-window clearance on regulatory matters involving the state.6


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