Union Budget 2022: What the healthcare sector expects

The domestic pharmaceutical industry is expecting an increase in the overall fund allocation for the healthcare sector, focus on policies that encourage R&D activities and continuation of tax concessions on various drugs in the upcoming Union Budget. Stay tuned for updates.

"Common people of the nation expect deduction on medical expenses, tax exemption on annuity income"

ByRaktim Chattopadhyay, Founder & CEO, Esperer Nutrition

"Onthe eve of thebudget of such a large democratic country, there is no point to debate priorities. It’s imperative we want Govt to emphasize social safety. The latest Covid surge appears to be the biggest risk factor for the economy at the moment. We are coming out of a very high fiscal deficit. Commonpeople of the nation expectdeduction on medical expenses, tax exemption on annuity income, and a hike in basic exemption cap. So I feel, to achieve the same we must stand strong with Govt and encourage to not compromise on capital expenditure. Because the fear remains, when the emphasis is on controlling the fiscal deficit, the axe always falls on capital expenditure. We must balance our aspirations and reality when looking at the budget critically."

"One of the main expectations for this year is an increase in funding with around 2.5 percent of GDP allocation to the healthcare"

ByPranav Bajaj, Co-founder, Medulance

An allocation of budget for establishing mini-Anganwadi centers in deprived areas is another factor that will foster inclusive growth and welfare in the country. Meanwhile, the existing healthcare gap can be filled by introducing tax benefits and relaxations for private players and public-private partnerships.

At Medulance, we firmly believe that prevention is better than cure and a shift from reactionary and interventional healthcare to proactive healthcare is the need of the hour. It will also reduce the financial expenditure in the longer run. Finally, the pre-existing schemes such as Ayushman Bharat and NDHM must be strengthened in terms of their effectiveness and implementation for apparent results.

"Crucial need for ambulances and decreasing the GST on new ambulance purchases"

ByPrabhdeep Singh, Founder and CEO, StanPlus

We would appreciate it if the finance ministry recognises the industry's crucial need for ambulances and decreases the GST on new ambulance purchases from 28% to a 5% or a 12% slab. If fulfilled, this big step will encourage the acquisition of more ambulances and minimise the time it takes for patients to reach hospitals during medical emergencies.

"GST should be exempted for startups that import reagents and capital goods for innovative research"

ByDr JoginDesai,Founder and CEO of Eyestem

The government of India should invest in creating a plug and play product development hubs for newer treatments like cell and gene therapy on the lines of the UK (https://ct.catapult.org.uk/) and Canada (https://www.ccrm.ca/)

GOI should invest in providing national-level access to the science community for journal subscriptions which are prohibitively expensive.

ESOPs should be taxed only at the time of sale. Taxation at an earlier stage (at vesting) prevents startups from fully vesting these with employees which is essential to provide reassurance of ownership of the options.

"Facilitating single-window clearances for government approvals for the local companies is must"

ByAnish Bafna, CEO & MD, Healthium Medtech

The Finance Budget of FY 2021-22 had made a landmark allocation of 137% increase over FY21 in the healthcare sector, by allocating a total of INR 2,23,846 crore for healthcare. As the country faces the imminent third wave of the pandemic, the expectations are higher for a significant increase in the budget allocation into the healthcare sector to promote the preventive, curative, well-being and essential services’ sectors that have already started off on a high note to not only cater to the country but also the world.

"Centre could bring in a model to incentivise the private healthcare sector to ramp up infrastructure"

ByHimesh Joshi, CEO & Co-Founder, Ayu Health Hospitals

As the country is gearing up for the third wave of the pandemic, the expectations are for greater budget allocation this year into the healthcare sector primarily for genetic research, aiding technology for early diagnosis in order to boost the capacity of our healthcare system to detect and cure new and emerging diseases in the aftermath of the Covid-19 pandemic. While the schemes like Ayushman Bharath were a step in the right direction, there is scope for amendments in the pricing structure where hospitals can provide high-quality healthcare services without incurring losses and also ease in the issues of delayed payouts to hospitals which are stretching into months for some schemes.

'Extend tax deduction to product development and R&D in pharma sector'

By Nikkhil K Masurkar, Executive Director, ENTOD Pharmaceuticals

"The pharmaceutical and medical devices industry has gained significant momentum owing to the government’s AatmaNirbhar Bharat initiative. The Union Budget 2022 is expected to build on the Production Linked Incentive (PLI) schemes and encourage continued investments in capacity expansion of sensitive APIs, drug intermediates, complex excipients, biopharmaceuticals and medical devices. While the draft R&D policy focuses on creating an ecosystem for research and innovation, certain tax incentives for the investment in ‘R&D focused funds’, set up for R&D based activities, could be introduced. India should participate in the innovation area at a global level. Along with a scheme similar to the PLI, the government needs to consider tax incentives to attract innovation. Interaction with industry and global players can help India's pharmaceutical sector to move from a generic manufacturer to an innovator developer and manufacturer for the world. Apart from that, Technology/digital transformation is another key area of focus. In fact, it would be the building block for the much-expected universal healthcare in India. Presently, GST on drugs is taxed under four categories - nil, 5%, 12% and 18%. While a few life-saving drugs are taxed at nil rates, some are taxed at 5 per cent and the majority fall under the 12 per cent GST slab. Extensions of a tax deduction on product development and R&D are some of the other demands of the pharmaceutical sector. The industry also seeks a 150% deduction in tax on in-house R&D.”

'Include smaller medical device players in special schemes'

By Ashok Patel, CEO and Founder, Max Ventilator

"Apart from the need to raise the share of healthcare as a proportion of GDP to at least 2.5 percent in the upcoming budget, the government must also further build on its earlier policy incentives such as PLI schemes and dedicated medtech parks by increasing allocations. In fact, the government should ensure that the smaller medical device players also get included and can benefit from the special schemes and offers that it has extended with a view to catalyze domestic manufacturing and to achieve the larger goal of self-reliance. Given the repeated occurrences of infectious diseases of epidemic scale in recent years, the government should also invest sufficiently into genetic and genomic research, epidemiology and vaccine research besides increasing allocation for broader healthcare R&D. Of course, the diagnostics and preventive health device segment must be given as much policy and financial support as possible. Further, the budget could also incentivize the consumables as well as medical device accessory segments which hold huge promise for the domestic sector. At the same time, adequate allocation must be made for training of personnel required for the deployment and usage of critical care equipment such as ventilators and other similar lifesaving devices."

'Increased allocation of budget for promotion of telemedicine'

By Vikram Thaploo, CEO, Apollo Telehealth

"India is combating a massive global pandemic with its resources available in the health sector. The health sector is expecting more specific allotments in this year’s budget to mitigate Covid-19 and help in the growth of the telemedicine sector. The telemedicine segment is growing at a rapid pace and in the future, we are expecting more technological innovations to take place in the industry therefore, the budget should be well allocated to the healthcare sector to initiate new innovations to be prepared for the fight with pandemics like Covid-19 in the future. It is important especially in a country like India where digital health can truly provide care to areas with short supply of doctors. Increased allocation of budget for promotion of telemedicine, home-based healthcare and national digital health mission implementation will help in building a strong healthcare ecosystem in the country. Telemedicine has potential to improve access to healthcare in remote and rural areas. Home-based healthcare will reduce burden on limited healthcare facilities. Digital Health along with various innovations should be encouraged for India’s future growth in population health. The government should also support private players and startups in this segment to increase the current coverage of the locations including tier-2 and tier-3 cities to provide the advanced healthcare facilities in these areas."

Health spend must reach 9% in 7-10 years

By Akshay Daftary, Director, SIRO Clinpharm

"With the upcoming announcement of the Union Budget 2022 by Finance Minister Nirmala Sitharaman on February 1, the healthcare sector hopes for a boost in funding considering the importance of the sector in the light of the ongoing pandemic. Both individuals and governments place health high on their priority list and its importance has been amplified given the external environment and circumstances. While various flaws in the existing healthcare system in India were exposed during the pandemic in India, however, the government has reacted swiftly, by proposing reforms and policies that have played a role in addressing the problems.

While the Covid-19 is currently a focus and would remain at the forefront for the next few months, prevention and wellness should receive a greater share of funding to ensure drug development projects for life-saving therapies remain a strong priority. Our government has also taken a lot of efforts and measures to fight the Covid-19 pandemic and uplift our healthcare infrastructure. Apart from interim Covid-19 stimulus packages action pandemic prompted our government to increase allocation to the healthcare sector to 1.8 per cent of GDP in 2021 which was a 137 per cent increase over the previous year, this focus on healthcare should continue and I think our government should further increase healthcare spending to 2.5 per cent to 3 per cent of GDP this year and should not wait till 2025 to achieve the earlier target of increasing health care spending to 2.5 per cent of GDP.

European countries spending on healthcare is around 9 per cent of GDP. Long term aim of our country should be to reach that level within the next 7 to 10 years. Healthcare should be treated as a basic need of each citizen and should be made available to all at an affordable cost.

I would also like the government to give a further boost to the pharmaceutical and Clinical Research industry. I will be happy if the government does the following apart from increasing spending on healthcare:Nil or No GST or CRO offering clinical trials and allied services to pharmaceutical companies; Weighted deduction on Research and Development under Section 35(2AB) to increase to 200% to incentivise pharmaceutical companies to undertake more research and development work so that spending for new drug discovery and innovation can increase. Also, the scope of 35(2AB) to include FMCG and other companies in the research and development of products of medicinal use as well as a food supplement and nutrition and cosmetics.

Our country has a strong ambition to be a 5 trillion economy by 2025 and this will be difficult to achieve if we don’t take bold steps and support businesses in the healthcare sector to overcome the adverse effects of the Covid-19 pandemic and continue to play their role in facilitating drug development programs and ensure India’s pivotal role in the global healthcare scenario."

"Consider lowering GST rate to 5% on nutraceutical products"

ByMr. Anil Khandelwal, Founder, Yogic Secrets,

"Its is suggested to consider lowering the GST rate from 18% to 5% on nutraceutical products made from patented ingredients extracted from plant, herbs or spices and supported by human clinical studies. This should be applicable for imported products made from patented ingredients and supported by human clinical studies. This will help not only make the end price affordable to consumers but also help promote our ancient wisdom, practises running for thousands of years and more importantly with zero side effects."

"The industry is hopeful that the government will provide impetus to this sector and pave sustainable growth"

By Mrs Srushti Adani, Co-founder of Wellnest

“The immediate and direct potential impact of Covid-19 has already resulted in thousands of lives lost and high incremental costs to the healthcare system. Healthcare institutions are facing catastrophic financial challenges, and the consequences were severely added upon due to the size of its population, diversity, and regional complexities. The government of India has started various programs in recent years to walk towards its goal of achieving a robust healthcare system.

Finance Minister Nirmala Sitaram is scheduled to present the Union Budget 2022 on February 1. The health-tech community expects a rational policy framework to develop sustainable business models and a robust digital health ecosystem. The industry is hopeful that the government will provide impetus to this sector and pave sustainable growth. The industry heavily invests in implementing efficient and effective healthcare delivery systems across the country. With the help of technology, startups are building platforms to diagnose and analyze the conditions and extend their continuous support at multiple levels. Another important aspect is to promote digital health, which health-tech companies are mainly driving.”

Flat GST, support for non-tech and mortgage-free loans key to better environment

By Sahil Dharia, Founder & CEO, Soothe Healthcare

"Simplification of regulationsspecially with respect to unlocking land, labour and capital use will create an overall ‘encouraging’ environment for entrepreneurs to take risk and business to thrive given the large domestic opportunity.Make in Indiais the pointed edge of that weapon that gives jobs, builds capacity, reduces our fiscal deficit and maybe even helps build technological prowess in time. These are all essential ingredients if India wants to project as a global power."

Flat GST rate:

"A major simplification drive for instance, a flat GST tax rate will go a long way in creating an impetus for a cyclical bull run in the industry. Moreover, there are anomalies in GST, for example, in the feminine hygiene sector with GST on sanitary pads being ‘zero’ the input tax credit can’t be availed by industry, making the transaction tax inefficient thereby reducing the growth CAGR.

Though manufacturing-based companies in India appreciate no Zero GST on sanitary pads, it is still significantly affected by high raw material and manufacturing costs. Hence, we look for some relaxation in this area."

Government support towards non-tech Companies to push Make in India agenda:

"To promote Make in India, the government should encourage more investment in the non-tech companies. Right now, capital is increasingly being deployed towards tech companies majorly Fintech. Government investments via e.g SIDBI serves the purpose of crowding capital into a sector which is already getting more than sufficient attention.Indian entrepreneurs need this support to shift the materials supply chain from China and sell products not only via the internet economy but also offline for easy access to a large population residing in the hinterland ofBharat."

Mortgage-free loans to small entrepreneurs:

"Lastly, banks need to reduce formalities and provide small entrepreneurs with loans without collateral. The CGTSME for instance can be increased from the current max 1 cr to 5 cr and make any MSME business eligible for it. An environment where small entrepreneurs can get loans without having to mortgage any personal asset will drive growth of new businesses as well as expansion of existing businesses and unlock the potential of our robust trading & manufacturing sector.If we get just a couple of things right, then the momentum we can build in the next decade will be comparable to the ‘great leap forward’ of China in the 90’s and Indian economy will still grow at 5-7% in the coming decade. This can truly solidify India’s position in the global pecking order."

Infographic | Union Budget 2022: All eyes on spending for healthcare — A look at health expenditure over the years

Pharma industry seeks enhanced funds for healthcare sector, ease of doing business in Budget

The domestic pharmaceutical industry is expecting an increase in the overall fund allocation for the healthcare sector, focus on policies that encourage R&D activities and continuation of tax concessions on various drugs in the upcoming Union Budget.

The industry is also seeking simplification of various processes in order to enhance ease of doing business for the private sector companies.

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