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Monday, February 22, 2010

Biotech cos for tax exemption for cancer drug R&D

India's biotech industry has made a strong pitch to the government to recognise anti-cancer drugs as life-saving drugs, bring pre-clinical studies under the ambit of service tax exemption and called for the creation of a robust regulatory mechanism and world-class accreditation agency.

Industry body Association of Biotechnology Led Enterprises (ABLE) said customs duty of 12.5 per cent, excise/countervailing duty of 16.32 per cent, additional duty on customs of four per cent and two per cent education cess result in 36.74 per cent increase in the price of cancer drugs, leading to cost to the patient going up.

Vijay Chandru, the President of ABLE, said that to provide a fillip to the services sector, ABLE would like to see extension of service tax exemption to pre-clinical studies in the coming Union budget"Currently, only clinical trials are exempt from service tax and there is no rationale to exclude pre-clinical studies from this exemption," Chandru, also the Chairman and CEO of Strand Life Sciences, said.

To accelerate the growth of the Indian biotech sector and make it a globally-strong industry, the government needs to ensure a robust, unambiguous, time-bound and transparent regulatory.

Chandru also said, "the government should set up a world-class, internationally recognised, accreditation agency which can set standards and protocols that are in harmony with global regulations and standards."

The biotech industry has also sought tax concessions, such as, weighted average tax deduction of 150 per cent on all market development expenditure pertaining to innovator products, 10-year excise duty exemption on all innovator products manufactured in the country and customs duty exemption for all innovator products produced in Special Economic Zones (SEZ) in India for a 10-year period from the date of marketing approval"The industry needs weighted average tax deduction on R&D expenditure and inclusion of international patent filing costs and market development costs u/s 35 (2AB)," he further added.

To spur manufacturing, ABLE has sought the removal of customs and excise duty on raw materials and components used by domestic manufacturers for production of life-saving drugs and diagnostics as the finished products are allowed to be imported duty-free.

Kiran Mazumdar-Shaw, head of Biocon Ltd, said a 10-year tax holiday is needed on all indigenously developed biotech drugs and products to act as an investment incentive for R&D.. "Five years is simply not enough to compete with MNCs who enjoy much higher drugs prices, thanks to a skewed way of deriving price levels which is based on unverified transfer pricing in the case of MNCs and audited cost prices for Indian companies," she said.

The industry has also sought SEZ-like incentives for biotech export oriented units

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