Increased excise duty, MAT on SEZs to hurt pharma industry
Leading drug makers on Tuesday said that higher excise duty proposed in the Budget 2011-12 would make medicines costlier and hurt the common man.
Further, pharmaceutical industry players also feared that imposition of Minimum Alternate Tax (MAT) on Special Economic Zones would adversely impact their profits, since most export units of drug firms are located in various SEZs.
“Healthcare has not received the priority it deserves. The one per cent increase in excise duty will increase the cost of medicines to the consumer by about 1.5 per cent,” Pfizer MD Mr Kewal Handa told PTI.
The excise duty on medicines and medical equipment has been increased from four to five per cent.
Mr Handa noted that the government could have done away with customs and excise duties on medicines, which could have helped in taming high inflation.
“It could have benefited the common man, who has to spend for healthcare from his or her pocket,” he added.
Dr Reddy’s Laboratories termed levy of MAT on special economic zone as “negative” for the industry.
”…the levy of MAT on SEZ units is negative for the industry at large. There have been no major provisions for the pharma sector and the budget in general is a neutral one for us,” Dr Reddy’s Laboratories CFO Umang Vohra said.
Lupin President, Finance and Planning S Ramesh said the Budget has little for the pharma industry and the MAT introduction on SEZs and the phasing out of EOUs would hurt the competitiveness of the sector in global markets.
He added: “The Budget, simply put, is long on intent but short on content — while the strategic focus of the Budget on various matters such as fiscal consolidation is explicit, the process by which it will translate into a tangible outcome is still to be made unequivocal.”
Commenting on the Budget, Glenmark Pharmaceuticals CEO & MD Glenn Saldanha today said that the Union Budget had nothing for the pharma industry.
Sturdy Future Awaits Global Pharma Industry
The global pharma industry is expected to grow at a stupendous CAGR of 6.5% during 2011-2013, on the back of rising health concerns and increasing healthcare expenditure in emerging markets.
Our latest research offering “Global Pharmaceutical Market Forecast to 2012”, depicts an upward trend in the global pharma industry as the effects of the recent economic downturn have been fended off leading to worldwide recovery. However, growth in the developed markets of the US and other leading Western European countries will be slow due to high levels of saturation. Hence, the global pharma market will continue its growth in tune with the emerging markets, including the Asia-Pacific, Latin America, and Central & Eastern European markets. Increasing healthcare expenditures and industry-friendly reforms will help the global pharma market to grow at a CAGR of around 6.5% during 2011-2013.
Despite economic and political issues being faced by the developing nations, the pharmaceutical market in these countries is growing due to rise in the demand of drugs. This untapped potential of countries, such as India, China, Brazil, Russia, Indonesia, and others is due to the rising prevalence of diseases. Besides, the governments of these countries are introducing new policies and laws to burgeon the trade and distribution channels of the industry, and controlling the drug counterfeiting and IPR issues. Thus, the major pharma companies are formulating expansion plans in these regions.
To gain in on the opportunities held by the potential of the emerging markets, the companies are considering all possible forms of penetration, even inorganic growth. Additionally, the companies are willing to collaborate with the local companies for a better understanding of the market and its demands. Our report categorically studies the major pharma markets of the world and also the most promising markets by region.
The report also includes a brief overview of the leading therapy classes, drugs, and competitive analysis of the key players in the industry. Moreover, the report has identified North America, Latin America, Europe, Asia-Pacific, and Africa as the most important regions to be looked out for in the pharma market. For a comprehensive outlook of each country, the report contains statistical and analytical information on these markets, covering their current market size, demand, and healthcare statistics. It also features analysis of future directions, supplemented with facts and figures.
Nader Groups Demand Feds Regulate Drug Industry Use of Social Media
With the growth of social media, companies and consumers now use sites such as Facebook and Twitter to share information and provide support and service. Now the use of these tools by one category of companies, the pharmaceutical industry, is under attack by a number of groups under the leadership of Ralph Nader.
The Center for Digital Democracy, Consumer Watchdog.org, US PIRG, and the World Privacy Forum have filed a lengthy and contentious complaint to the Federal Trade Commission (FTC) accusing pharmaceutical companies of inappropriately using social media and digital marketing to promote their products.
“Consumers now confront a sophisticated and largely stealth interactive medical marketing apparatus that has unleashed an arsenal of techniques designed to promote the use of specific brand drugs and influence consumers about treatments for health conditions,” the complaint maintains.
All of the organizations filing the claim, with the exception of the World Privacy Forum, were either started by consumer advocate Ralph Nader or executives who worked for him.
‘No Threat to Public Health’
There is nothing wrong with pharmaceutical companies using social media and digital marketing to reach consumers, says John R. Graham, director of health care studies at the Pacific Research Institute. He maintains the most important thing is that the right medicine gets to the right patient at the right time, which requires free and open communication.
“As long as people engage in social media and digital marketing campaigns voluntarily, there is no threat to consumer privacy or public health,” says Graham. “There is no law compelling any citizen to use any social media. There’s no law compelling anyone to use old media, either. People should be free to decide how they engage social media.”
Graham says social media’s speed of information distribution can improve the public health, as information travels freely without central control.
“If the FTC or Congress limits all digital marketing by pharmaceutical companies, everyone’s rights will be violated. It is absurd to expect research-based pharmaceutical firms to use the most up-to-date technology to invent new drugs and then forbid or limit them from using the most up-to-date technology to communicate the those drugs’ benefits,” Graham said.
“If someone thinks it is wrong for a drug maker to use social media to communicate, that person is under no obligation to communicate with a drug company via social media,” he added.
Regulators Assume the Worst?
According to Joseph Coletti, director of health and fiscal policy studies at the John Locke Foundation, regulators are uneasy about the use of social media as an information resource in part because most social media interaction limits the number of warnings that can easily be communicated.
“Social media is unregulated, and regulators naturally tend to think this is a bad thing. For instance, if you are a patient or a doctor and you talk to a drug company, [the regulators] think that you demand their product from that single contact without having any other knowledge,” Coletti said. “If you put 140 characters on a Twitter message, you can’t possibly have enough warnings about the consequences or side-effects of using their product.”
Coletti maintains Nader and his partner groups don’t see marketing on social media as educational.
“But what is this if not educational?” Coletti asks. “How are you supposed to know what drugs are out there or what can help you? Or if you’re in a Facebook group because of your condition, why shouldn’t a drug manufacturer be able to reach you?”
Europe’s Paternalistic Approach
Devon Herrick, a senior fellow at the National Center for Policy Analysis, says limiting risk and patient preference motivates many of the regulators.
“Europe has a much more top-down, paternalistic society, where doctors act as social advocates. They think they should tell you what to do, what medicines to take, and the patient has little say in the matter,” said Herrick. “Personal media short-circuit this relationship.”
Herrick notes Facebook and other social networks give patients the ability to interact with other patients, doctors, and pharmaceutical companies to learn more about available treatments.
“What better medium than Facebook, where communities can form up around a medicine or treatment, where the company is running the page and moderating it and answering your questions and you’re talking to other patients with similar illnesses? Where else are you are going to bring all the stakeholders together in a transparent manner? If the consumer advocates have their way, all this will be lost,” explains Herrick.
Suppressing Dissenting Information
Regardless of the outcome of the Nader-backed complaint, Graham maintains free and open access to information about new therapies is a key to limiting government control over available treatments—something he says will be all the more important once agencies such as the Independent Payment Advisory Board, created by President Obama’s health care legislation, inevitably seek to limit people’s therapeutic choices.
“President Obama declared that if there is a red pill and a blue pill and one costs more than the other, but the politicians think that they are the same, he’ll [only] let you have the cheaper one,” Graham explains. “Obviously, the government can only impose such a rule if it controls the communications that the people have about medicines, and allows no dissenting information.”