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Bio-pharma companies, herbal drug majors and the Indian Society for Clinical Research (ISCR) have taken objection to the proposal to levy a service tax of 12.3 per cent as it can seriously hit the revenue generation and mar growth of the clinical trial industry. But the Clinical Trials Expert Committee chief Prof. Ranjit Roy Choudhury says that companies are more concerned about the slow pace of approvals for human studies than the service tax imposed.
For the last 18 months, clinical trial industry in the country is forced to survive in a volatile regulatory environment which has led to a drastic decline in the number of human studies conducted.
Companies like Biocon and The Himalaya Drug Company among others are dependent on human studies because most of their products are ethically promoted and require safety-efficacy data for clearances from the regulatory authority.
Despite the intent of ‘Health for All’ highlighted by the Finance Minister Arun Jaitley in his Union budget he chose to withdraw the service tax exemption on technical testing of new drugs, including vaccines and herbal remedies. Withdrawing the exemption on service tax and enforcing 12.3 per cent levy is viewed by the ISCR as a disincentive to undertake human studies in India. It has sent a wrong signal to the global community on the government’s commitment to promote research for better healthcare.
“Given the fact that India reports the highest disease burden and accounts for a sixth of the world’s population, we need to foster an ecosystem that encourages clinical research. The ultimate impact of a slowdown in clinical research is on patients, for many of whom participation in a trial is their only hope of survival or a better quality of life,” pointed out Suneela Thatte, president, ISCR.
Airing similar views Philipe Haydon, chief executive officer, The Himalaya Drug Company said, “India was proving to be difficult place to conduct clinical trials. Now herbal companies including ours are at the receiving end. We are facing a serious crunch of investigators for our human studies which are mandatory since all our pharma products are prescription-driven and require clinical research data to back the effectiveness and well being. On an average, we conduct 10 clinical trials annually which span over four months. The service tax of 12.3 per cent will definitely hit the company’s net earnings”.
“It is most puzzling and disappointing to see the withdrawal of service tax exemption on drug testing. This is another blow for the clinical trials industry that is already reeling from the ongoing moratorium and regulatory uncertainty,” said Kiran Mazumdar-Shaw, chairman and managing director, Biocon Limited.
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