Budget 2016: Pharma & healthcare companies look to tax sops, infra status

26 Feb 2016


More money at the hands of the ailing and the health-conscious, with additional income tax exemption in health spending, medical reimbursements and health insurance, sums up the budget expectations of pharma and healthcare companies.

Besides, the healthcare industry wants the government to give infrastructure status for healthcare centres and facilities, which will make it easier to get funding for speciality clinics.

As finance minister Arun Jaitley prepares to present his second annual budget proposals on Monday (29 February), pharmaceutical and healthcare companies are unanimous that without government's help to improve the lives of the people, their business too won't prosper.

The pharma and healthcare sector want government support to increase spending on healthcare and pharmaceutical sectors and on R&D, create an enabling environment for healthcare start-ups, simplify tax structure for companies, and so on.

''We foresee a significant growth for the government to invest in preventive healthcare in the 2016-17 budget, in order to strengthen and give a boost to the segment in India,'' says Amol Naikawadi, joint managing director, Indus Health Plus, a healthcare start-up.

The government should also come up with a medical innovation fund to boost healthcare entrepreneurship and consider seed funding, he says.

He wants preventive health check-ups to be given higher tax exemptions - raised from the current Rs5,000 to Rs20,000. This will help shift focus to preventive measures, he says, adding that the government should also come up with policies to support and spread awareness of the advantages of an early diagnosis.

Currently, the annual spending on public health adds up to around 1 per cent of the country's GDP. This can go up many fold with increased investment in healthcare technology and infrastructure, he adds.

"This year's budget will be very challenging; we are expecting a lot from the government to give a boost to the start-up culture as a whole,'' says. Suvro Ghosh, founder of Lazoi Healthcare Pvt Ltd.

''Rationalisation of complex tax structure and incentivising the sector through a five-year tax break would be a very encouraging step towards the right direction. Minimum bureaucratic interference with a single window concept will ensure 'ease of starting a business' which is extremely important for a start-up and along with other key factors to drive these into this new era of entrepreneurship,'' he adds.

Healtcare start-ups need special incentives as it would in turn help address the core healthcare problems that have been plaguing this country since ages, he says.

''Keeping the positive of 'Start-up India, Stand up India' event into consideration, government should allocate a decent amount of budget for start-ups. The fund which will be allocated should vary from start-up to start-up based on the stage of their idea execution. Early stage start-ups need more support with funds. The allocations should also reach the start-ups on time, with transparency and without any additional hurdles.

Higher tariffs on medical equipment to push up healthcare costs

Medical equipment maker Philips India Limited wants government to remove tariff barriers on imported medical equipment as, according to a company spokesman, will not help domestic manufacturing, rather, it would only result in higher prices of imported medical equipment and hence cost of healthcare.

''The healthcare industry in general, along with Philips, feels that creating tariff barriers will not help indigenous manufacturing. Instead, it would lead to a hike in prices of medical devices, which contributes significantly to healthcare costs for patients.'' Says V Raja, vice chairman and managing director, Philips India Limited.

"The `Make in India' slogan has given out very positive signals to manufacturing industries. With this budget, I expect that Ayurveda should be upgraded to a priority sector, in order to encourage research and development," says Dr Muhammed Majeed, founder and chairman of Sami/ Sabinsa Group.

"In terms of the beauty and wellness sector, benefits in the budget should bring about a revival in ayurvedic services and products. The health and wellness industry is considered to be one of the fastest growing industries in India and can further grow with the support of the government," he added.

"Considering all the aspects, the healthcare sector plays an important role in any countries' development and should be promoted by our government. Healthcare spending by the government should be progressively scaled of 2.5 per cent of GDP," Dr Majeed said.

Abhimanyu Bhosale, CEO and co-founder of Sami/ Sabinsa Group, expects the budget this year to take the healthcare technology industry by surprise. "The budget should reflect what Mr Narendra Modi is trying to do for startup companies," he said.

Bamasish Paul, co-founder of Healthenablr, said he expects increased budget allocation on healthcare and child welfare sectors, especially on programmes related to reducing female child infanticideand upgradation of hospital facilities in semi-urban and rural centres.

"Special incentives for technology companies developing healthcare infrastructure and tele-health platform to help connect rural patients with doctors in urban centre in form of subsidised financial packages will help companies like Healthenablr to expand into semi-urban and rural markets,'' he added.

"India's healthcare industry has boomed with the emergence of e-reports, appointment booking portals, telemedicine, etc; not only in terms of economy but also in terms of employment opportunities and an expansion to under-served areas. With the technology playing a pivotal role, the future of healthcare is going to be information-rich and patient-centric<' says Sridharan Sivan, founder of S10 Healthcare Solutions.

"Besides this, the asymmetry in the demand-supply game will make the sector an attractive one for private equity investments. With a rise in the number of start-ups entering the health sector, coupled with IT there is a greater scope of creativity and innovation in the sector," he said.

Sivan has sought infrastructure status for healthcare infrastructure, which will make it easier to get funding for speciality clinics.

He also said that medical visas for foreign patients should be made easier to give a boost to medical tourism in India. Moreover, Sivan also sought a raise in the tax-exempt for medical reimbursements level from 15,000 to 1,00,000.

To give e-commerce healthcare companies a boost and to encourage them to enter rural markets, the budget should encourage e-health with tax exemption, he added.

As for GST, the government should work towards exempting healthcare services and products from Goods and Services Tax (GST), especially on preventive health check-up and wellness programs, he said.

Currently, the pharmaceutical industry continues to benefit from lower cost of research and production, which aids manufacturing for exports, Mahesh Singhi, managing director, Singhi Advisors, said. Indian manufacturers are expected to face fewer regulatory hurdles in FY17 on strengthened quality and control processes, he added.
Some recent developments like USFDA approval of medicines manufactured at Aurobindo Pharma and Cipla are a good sign for the sector on the whole, he said, adding that the pharma industry will grow and corner even more share in the market.

India's skilled labour, experience in pharma and a market hungry for cheap medicine will help the pharma industry launch new drugs, explore new markets while expanding the existing ones.

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