Special: Bioscience sector expects big ticket budget

The union budget 2016-17 is being eagerly awaited to unfold few major announcements favoring expansion of bio business activities at a much broader level

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Budget Wishlist: Will he do it this time?

NEW DELHI: Will the budget 2016 set to be presented by the Union Finance Minister, Mr Arun Jaitley meet the demands of the bioscience sector? Hopefully yes or may be not? So, what holds for the sector when the minister opens his briefcase on the morning of February 28th. Above all the speculations, there are many examples which the government can set this time around. Let us take a look at the voices raised by various stakeholders from key verticals:

Health expects bigger pie

“We foresee a significant growth for government to invest in preventive Healthcare in 2016-17 budget in order to strengthen and give boost to preventive healthcare segment in India. Government should also come up with medical innovation fund  to boost healthcare entrepreneurship and consider seed funding,” mentioned Mr Amol Naikawadi, Joint Managing Director, Indus Health Plus, “The tax exemption on preventive health checkup should be raised from Rs 5000 to Rs 20,000 in order to shift the focus to preventive measures. There is also a rise in Health checkups from 15-17%, therefore government should come up with the policies to support and spread awareness for early diagnosis. Current spend of 1% of GDP on public health should be increased along with investment in healthcare technology and infrastructure.”

According to Ms Poonam Muttreja, Executive Director, Population Foundation of India, “Based on the last central Health Budget estimates of FY 15-16, the allocation for family welfare was as low as 4 per cent. The trend of central government allocations to Family Welfare has been declining in the last few years, with the decline being 54% between 2013-14 and 2015-16. Under NHM, a meagre 1.45 per cent of the total family planning expenditure is on spacing methods, which reflects the lack of much needed attention to spacing.”

Photo_Poonam Muttreja“The Health Budget for FY 16-17 should reflect an increase in investments on family planning based on the Ministry of Health and Family Welfare’s (MoHFW) approval to the introduction of new methods and emphasis on spacing methods to the family planning program.”
Poonam Muttreja, Executive Director, Population Foundation of India.

“The Health Budget for FY 16-17 should reflect an increase in investments on family planning based on the health ministry’s approval to the introduction of new methods and emphasis on spacing methods to the family planning program,” said Ms Muttreja.

Most of the experts agree that the introduction of an additional spacing method needs to be supported with a focus on a regular contraceptive supply along with maintaining utmost quality of care and client follow up.

Hybrid Model Key to Universal Health Coverage

India needs a financially sustainable and operationally feasible plan for Universal Health Coverage (UHC). It should aim to cover 75% of the Indian population over the next decade, with a provision of primary and secondary care of up to Rs 60,000 and tertiary care of up to Rs 200,000 for each citizen. The government should cover insurance premium for the poor, while those with the ability to pay can partially fund their own treatment. This hybrid model is the key to UHC. Both supply-side funding and demand-side contributory payment have been tried successfully in developing nations such as Thailand, Vietnam, Sri Lanka and Indonesia. This hybrid model uses existing infrastructure, human resources and technology and stitches together a framework with needed checks and balances.

The Government needs to encourage a “Make in India” campaign in the biomedical equipment and consumables sector by third-party foreign investors, which are already licensed to market in India. They must manufacture the products in our country using Indian workers. In addition, the certification of “Made in India” products by a central body (DGCI or QCI) should be allowed and they be made eligible for central procurement.

For start-ups engaged in healthcare infrastructure and manufacture of biomedical equipment, the budget must provide a tax holiday of 5 to 10 years. The healthcare industry also needs to be exempted from GST and VAT. Essential drugs and biomedical equipment and consumables (implants) should be charged VAT / GST at zero percent.

The Government should encourage skilled health professional overseas to return to India through reciprocal recognitions and registration of their training and experience. Most importantly, medical education needs to be liberated from the shackles of the Councils.

There is an urgent need for Government investment both directly and through Public-Private partnership (PPP) route to enhance skills training in allied health sciences via a centrally designed curriculum and provision of low interest study loans.

Mr Shashank N D, Founder and CEO – Practo, mentioned, “From a healthcare perspective, up until now, the expenditure on healthcare has been limited and while India has the fastest growing population and an ambitious growth aspiration, it has always had a disproportionately small health budget. With the focus on digital India, I hope the government provides provisions that drive digitization adoption by healthcare providers.”

Shashank ND- Founder and CEO- Practo (2)
“Government could incentivize, assist and enable more hospitals, clinics and other enterprises to leverage information technology (IT) to create patient-centric healthcare systems.”
 Shashank N D, Founder and CEO – Practo.

Digitization can bring considerable efficiency in the system which will help alleviate a lot of challenges consumers face today due to the limited access/supply of healthcare providers in the country. Having digital records itself can considerably improve the quality of diagnosis and care consumers receive.

“Government could incentivize, assist and enable more hospitals, clinics and other enterprises to leverage information technology (IT) to create patient-centric healthcare systems that can improve response times, reduce human error, save costs, and impact the overall quality of life. Another thing we should do is innovate and promote “Make in India” initiatives in the medical devices sector as well as other sectors. There can be multiple models – the government can purchase and provide to PHCs or even take steps where device makers can procure these devices at a more affordable price. I think for the cost that vast majority of Indian market can sustain, importing won’t be viable so the Make in India program could really help in this aspect and special focus on this area in the budget would be welcome,” opines Mr Shashank.

Startups deserve best treatment

Startups can continue to thrive and solve some of the most fundamental problems that plague our country, add considerable growth to our economy and help further establish India’s innovation credentials. The upcoming budget can prove to be a new milestone towards acknowledging and supporting the role of entrepreneurs in shaping Indian bioscience sector.

As per Dr Prem Nair, Medical Director, Amrita Institute of Medical Sciences, Kochi, Kerala, “I am hopeful that the Union Budget will keep up the good work set in motion by the ‘Start Up India, Stand Up India’ initiative. 2015 was an exciting year for startups. There has been phenomenal growth, and incredible excitement (and investments) into ideas. Ideas that could potentially solve some of the most serious problems India has – from transportation to healthcare. From financial inclusion to advanced robotics and more. The last 6 months in particular have seen big focus on startups from the government as well with Prime Minister Modi’s Startup India Stand up India being the watershed moment. So clearly, aggressively pushing startups and making it easier for them to start and painless for them to scale is critical for a strong, thriving economy that wants to grow at 10%. I think at an industry level the following things need to be done to enable growth.”

Pharma demands special attention 

In his budget expectations, Mr Sanjay Murdeshwar, Managing Director, AstraZeneca Pharma India Ltd. (AZPIL) mentioned, “We hope the Union Budget 2016 will have specific investment announcements for the biopharmaceutical sector, which plays a critical role in addressing unmet medical needs in chronic health diseases such as cancer, diabetes, heart diseases and respiratory disorders.”

Sanjay Murdeshwar MD AstraZeneca“We hope the Union Budget 2016 will have specific investment announcements for the biopharmaceutical sector, which plays a critical role in addressing unmet medical needs.”
Sanjay Murdeshwar, Managing Director, AstraZeneca Pharma India.

On a highly optimistic note, Mr Sanjay Murdeshwar thinks that the Union Budget 2016 will focus on:

  • Healthcare spend: Increase healthcare spend to at least 2.5% of the GDP in the next two years. The health budget must include tax sops and financial aid for enhancing infrastructure and scientific innovation.
  • Skill development: As a science and knowledge based industry that is focusing on delivering the next generation of medicines for many of today’s diseases, the industry requires specialized and highly skilled resources. Last Budget, the government announced setting up of three new NIPERs (National Institute of Pharmaceutical Education and Research). This year, we hope to see an increase in the current momentum of skill building, collaboration between companies and universities that will further drive innovation and economic growth in India.
  • New Pharma Ministry: Setting up a single consultative platform and a unified ministry for policy making to strengthen regulation and administration mechanism in the pharmaceutical sector will be a very positive move.
  • Universal Health Assurance Programme: Implementing the promised Universal Health Assurance programme will benefit patients and increase access.
  • There remains complexity on the transfer pricing. It is imperative that simplification and uniformity be brought on the transfer pricing assessment. We hope that the APA (Advance pricing agreement) concept is simplified and used as a common basis and the litigations on this front are reduced.

Bioenergy asks for special rebates

As per Mr G S Krishnan, Novozymes, “To move forward with the ‘National vision’ of making India self-reliant on energy needs, it is proposed to encourage the production of cellulosic ethanol i.e. ethanol from agri residue (biomass).  As the Industry is taking off only now, it is dependent on world class enzymes that are currently imported. There is a burden in excess of 30% import duty on the price of the product, thereby making it expensive for consideration by industrial users proposing to produce bio-ethanol from agri- residues.”

GS_Krishnan
“Cellulosic enzymes should be exempted from import duty (granted for a period of 5 years or so) so as to make it more affordable, provide sufficient time for the technology to be developed in India” 
G S Krishnan, Novozymes

Given the opportunity to, at least theoretically, replace complete demand of imported oil through bio-fuels (cellulosic ethanol route) and the clear focus on the PMO to achieve energy independence; it would help to remove the barriers to quick commercialization of this technology. The easiest one of them would be to waive off high import duties on the enzymes which are required to hydrolyze the cellulase in agri-residues to ethanol.

On the blending mandate front, India currently is procuring around 5% of the desired volumes from the molasses route and to leapfrog to the 20% blending target, there is a need to kick-start the first few cellulosic ethanol plants in India as is the case in other part of the world. A rough estimate of agri-residues that are surplus and are openly burnt in fields comes to 120-160 million tons, which can produce 2500-3000 crore litres of ethanol – making India self-reliant.

The agricultural sector in India presents a unique opportunity to develop next-generation ethanol industry over the next decade with significant potential for the economy, reduction of GHG emissions, heightened energy security, significant reduction in air pollution and majorly benefitting farmers. Now, assuming part of the 10% blending mandate, 2.5% have to be advanced biofuels by 2018 which would represent 575 million liters i.e. $50-120 million additional income for our farmers with 0.7-1 Million jobs in rural areas enhancing livelihood and growth of the rural economy thus bringing us out of the perpetual agrarian crisis.

Cellulosic enzymes should be exempted from import duty (granted for a period of 5 years or so) so as to make it more affordable, provide sufficient time for the technology to be developed in India, and to encourage the use of  alternate and renewable fuels for better and prosperous future.

Medical devices want tax exemption, special allocation

Mr Varun Khanna – Managing Director, Becton Dickinson India & South Asia opined, “Last budget didn’t impact the medical devices sector as there was no change in taxation or healthcare spending. It will be heartening to see the government present a growth oriented budget this year that sets ahead a clear direction to ensure a long-term optimism.”

Photo_Varun Khanna“The healthcare industry will want the government to spend more on healthcare. An increase in healthcare spending from 1.3 per cent to 5 per cent of the GDP will be a welcome step.”
Varun Khanna – Managing Director, Becton Dickinson India & South Asia.
  • Relax import duties – Any increase in import duties will be detrimental to the health care sector. 70% of the medical devices today are imported. The increase can be an impediment towards providing quality patient care in India. Reduction in import duty on medical devices would also likely reduce the overall cost of treatment.
  • Expand and institutionalize the ambit of social health insurance to ensure that the population accessing public healthcare facilities is able to avail services free of cost beyond those being provided by the national health programs associated with communicable diseases.
  • Strengthening the government healthcare set ups and ensuring surveillance of govt spends on healthcare – Governance mechanisms should be established to ensure equitable health access to all cadres of population.
  • Budget should have an impetus on trustworthy accreditation and innovative education by creating centres of excellence (CoE) to bring standardized clinical practices in healthcare.
  • Innovation, science and technology budget allocation – to enable creation of public platforms to promote better linkages between industry and academia and R&D labs by encouraging CoEs for research and education.
  • Spend more– The healthcare industry will want the government to spend more on healthcare. An increase in healthcare spending from 1.3 per cent to 5 per cent of the GDP will be a welcome step.
  • It is important to benchmark the standards of quality of care, against global best practices. In fact the govt should create a mechanism to review and adopt patient and healthcare worker safety guidelines issued by agencies like WHO on an annual basis in an evidence based manner. Incentivization should be considered for facilities following best practices including preferred empanelment with private and public health insurance agencies.

Agri-biotech expects fair share

Outlining the expectations of the sector from the Budget, Dr Shivendra Bajaj, Executive Director, Association of Biotechnology Led Enterprises (ABLE-AG), said, “Basis the events of 2015-16, the agri-biotechnology industry in India finds itself at the cross-roads. The focus on improving farmer livelihoods and Indian agriculture through new technology should be the focus in the budget.

Dr Shivendra Bajaj, Executive Director, ABLE-AG.

“We are looking at a strong showing from the budget with regards to regulatory backing for the agri-biotech industry.”
Dr Shivendra Bajaj, Executive Director, ABLE-AG 

“The agri-biotech industry therefore is looking for a strong stimulus from Budget 2016, especially in the area of incentivising crop research. This goes hand-in-hand with infrastructure development to enable the growth of India’s agri-economy, improve farm incomes, and subsequently make the Indian farmer globally competitive. We are therefore looking at a strong showing from the budget with regards to regulatory backing for the agri-biotech industry,” he added.

The wishlist for budget 2016 is long and unending. Yet what the stakeholders expect from the government is decisiveness. So, will the history repeat itself again? or Mr Jaitley makes some big ticket announcements. Let us tune in.