By Ankit Shah – Vivek Kaul’s Inner Circle (India) –
Every sector has a wish list for the Union Budget – various sops or positive amendments it hopes to see.
The pharma sectorwas expecting additional tax relief and was hoping for a weighted deduction for R&D activities.
The Budget disappointed. Despite global pricing pressures, competition, a slowdown, and regulatory issues, there were no concessions for the pharma industry.
But there was an important announcement that could have negative impact on the current prospects of the domestic pharma industry.
The Budget has proposed for promoting use of generics in Indian markets.
In India, drugs are currently sold by their brand name and not the generic name. For example, paracetamol (Generic name, its Active pharmaceutical ingredient or API) is widely used medication. And the leading selling paracetamol brand is Crocin.In India, a doctor would write Crocin in the prescription and not paracetamol. This differs from most developed markets.
If a particular drug is sold by many companies, the doctor would prescribe the generic name and not the brand name.
The new proposal is easier said than done.In India, for any given drug, a wide range of brands is available. And the price difference between the leading brand and low-cost substitutes is huge.
Further, the quality and pharmacological properties of the two brands may be different despite having the same active pharmaceutical ingredient. This is one reason doctors in India generally prescribe brands.