Pharma companies may get tax sops for clinical trials, patent filings

The Department of Pharmaceuticals is planning to recommend extension of tax benefits given to drugmakers for in-house R&D and research work done outside the firm such asclinical trials, bio-equivalence studies, regulatory approvals and patent filings which could benefit most Indian drug companies. Expenses incurred ondrug development process outside the firm should be eligible for tax exemption, if done through firms exclusively engaged in R&D and approved by specified authority, a draft proposal of the sub-working group (SWG) on regulatory issues for pharma sector for 12th Five-Year Plan said.

At present, the government gives weighted average tax deduction of 200% for in-house R&D investments and up to 175% if done with few R&D partners recognised by government. Pharma requires big investments to develop new medicines and most local drugmakers spend about 5-10% of their revenues on R&D.

Source : Economic Times