Govt clears Rs 150 cr pharma R&D fund

Govt clears Rs 150 cr pharma R&D fund

SEPT 13: The Finance Ministry has cleared the Research and Development Fund for pharmaceutical companies with a one-time contribution of Rs 150 crore from the government.

The finance ministry has adviced the ministry of chemicals and fertilisers to frame necessary guidelines for the utilisation of the R&D Support Fund.

The move is expected to provide the pharma industry with the impetus it has been looking for to venture into extensive R&D activities.

Further, the finance ministry has clarified that no administrative structure or separate instructions would be set up for the purpose and the National Pharmaceutical Pricing Authority (NPPA) would act as secretariat for the foundation.

It has further been clarified that R&D efforts only for specific drugs and items in nationally relevant areas would only qualify for the government assistance. The assistance would be made available only in relation to the incremental investment in research and development activities.

The Drug Development promotion Foundation has been advised not to make any open-ended committment, but the limit the committment only to the extent of funds avaialable to the extent of funds available in the fund.

The fund now proposed to be released by the finance ministry is in slight variation what the minstry of chemicals had sought earlier. Pharma Research and Development Committee had recommended the creation of pharmaceutical R&D support fund in which the government was supposed to set aside a corpus of Rs 50 crore as a one-time contribution. Further a surcharge of one per cent on MRP (maximum retail price) of all pharmaceutical formulations sold and to be collected through the central excise machinery and placed in the fund was proposed.

Government in the recent past has laid a lot of importance to the R&D activities and a number of issues relating to R&D will be taken up in the government's forthcoming mega fair, `India Chem 2000". Leading companies in the pharma and chemical sector will be participating in this international fair.

The proposed Drug development Promotion Foundation will be an autonomous and independent of government. The NPPA would act as the second tier and would perform the functions of the executive for implementation and management of the directions of the DDPF.

The need to substantially increase the R&D expenditure from the current levels of Rs 320 crore (or 2 per cent of sales) to Rs 1,500 crore (5 per cent of sales) by 2005 has been voiced by the industry.