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  • Jan 28, 2000 - Incentive package for investment in pharma research

Incentive package for investment in pharma research

Jan 28, 2000

The government is set to announce a two–year tax holiday, accelerated depreciation norms as well as reduced customs duties on R & D related spending in the pharma sector. This is likely to provide a boost to companies to set up pharmaceutical research facilities in India. The pharma research is initiated with the conceptualization, experimentation and early discovery of screening over 100,000 compounds. These are screened down to 1,000 by the pre–clinical stage.

The next stage involves the three phases of clinical trials where the new drug is tested on animal and human volunteers. The compounds get screened down to 2 or 5 by the end of clinical trials and around 1 or 2 get through the regulatory review.

It is in the process of clinical trials that India offers a real cost advantage. However, the results of the trials conducted in India are not accepted by regulatory authorities worldwide. Many countries require a part of the trials to be conducted again in their respective countries before they allow the drug to be sold.

The incentive package could lead to around $ 5 bn of investment into pharma research and give India a recognition as a centre for conducting clinical trials. One of the reasons for the increasing trend towards mergers in the international arena is the increasing cost of development (as distinguished from research) i.e. the stage of clinical trials and regulatory approvals apart from the marketing.

It is possible that with incentives in place for research and development could tempt multinational corporations to look at India as a centre for conducting their development work.

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