Indian drug companies to gain from price controls

Drug company majors including Glaxo India, Hoechst Marion Roussel, Pfizer India, Lupin Laboratories, Cipla, Ranbazy, Novartis, Dr Reddy's Labs, who have 30% of their turnover under price control, stand to gain from an Indian budget announcement of a substantial reduction in the percentage under price control, according Satish Reddy, ceo of Dr Reddy's Laboratories, who added that the list of drugs concerned would eventually come down.

A more concrete measure is for companies which have begun investing in r&d in expectation of product patents. The definition of r&d expenditure has been expanded to include expenses on clinical trials, patent filings and regulatory approval. However, income from r&d like milestone payments and royalties continues to be taxed at the existing rate, but Reddy said that the companies were expecting the royalties received from companies abroad would be fully tax exempt.