What Health Sector Is Expecting From FY22-23 Budget

The ongoing COVID-19 pandemic has exposed several gaps in public health systems in many countries, including India. Despite multiple challenges, India has been dealing with the health crisis much better than other large countries.

The country brought many reforms and policy level changes to address the issues. The Indian government launched production linked incentive (PLI) schemes for domestic manufacturing of critical Drug Intermediaries (DIs), Key Starting Materials (KSMs), Active Pharmaceutical Ingredients (APIs), and Medical Devices, a scheme for creation of four Medical Device Parks, the National Digital Health Mission (NDHM), etc. But the healthcare industry still needs a better support for sustained growth.

As the countdown for the from Union Budget 2022-23 begins, experts from the healthcare, pharma and diagnostics industry have shared their expectations from this year’s Union Budget. Apart from increasing the health expenditure above 2.5 per cent of GDP, industry experts expecting some reforms like incentivizing private investment in healthcare infrastructure, expanding health insurance coverage, investing in increasing healthcare manpower and skilling and rationalising GST on healthcare products and services in the upcoming budget of 2022-23.

Following are budget expectation quotes from industry experts:

More specific allotments in telemedicine sector

Vikram Thaploo, CEO of Apollo Telehealth (A unit of Apollo Hospitals Group), said, “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,” he added.

Inclusion of smaller medical device players in special schemes

Ashok Patel, CEO and Founder, Max Ventilator, highlighted the need to raise the share of healthcare as a proportion of GDP to at least 2.5 percent in the upcoming budget, and to strengthen the government’s 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,” Patel stated.

Further, he said that the government should also invest sufficiently into genetic and genomic research, epidemiology and vaccine research besides increasing allocation for broader healthcare R&D, given the repeated occurrences of infectious diseases of epidemic scale in recent years.

He added, “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.”

150 per cent deduction in tax on in-house R&D

Nikkhil K Masurkar, Executive Director, ENTOD Pharmaceuticals, pointed out that the pharmaceutical and medical devices industry has gained significant momentum owing to the government’s AatmaNirbhar Bharat initiative.

From the Union Budget 2022, he is expecting the government to build on the Production Linked Incentive (PLI) schemes and encourage continued investments in capacity expansion of sensitive APIs, drug intermediates, complex recipients, 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,” Masurkar said.

“Presently, GST on drugs is taxed under four categories – nil, 5 per cent, 12 per cent and 18 per cent. 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 per cent deduction in tax on in-house R&D,” he added.

More spending on preventive healthcare and wellness

The most prominent area of focus in Budget 2022 is expected to be healthcare, according to Dr. Aashish Chaudhry, Managing Director, Aakash Healthcare, Dwarka.

Apart from focusing on the Covid-19 pandemic, he wants the government to increase the proportion of spending on preventive healthcare and wellness.

“The last Budget announced a 137 per cent increase in healthcare spending to address some of the gaps. Healthcare accounted for about 1.8 per cent of GDP in 2021. We should aim to raise it to at least 2.5 percent of GDP this year. Despite the focus on the Covid-19 pandemic at the moment, it is critical to increase the proportion of spending on preventive healthcare and wellness. Ayushman Bharat is undeniably a positive step toward achieving the goal of universal healthcare; however, more funding is required to ensure its long-term success,” Dr. Chaudhry noted.

More public-private partnerships

Sugandh Ahluwalia, Chief of Strategy, Indian Spinal Injuries Centre, underlined that India’s total healthcare expenditure is significantly lower than that of other countries. In addition to increased spending on healthcare in this budget, she is expecting more public-private partnerships.

She stated, “The pandemic has highlighted the critical need for high-quality public hospitals. More public-private partnerships, as well as additional investments, are required to strengthen indigenous manufacturing of medical devices, personal protective equipment (PPE), and raw materials for drugs. Hence, the government must allocate more budget for the healthcare industry. Furthermore, higher tax breaks for the private sector to modernize medical facilities will go a long way toward ensuring better healthcare, more investments, and thus more jobs.”

Govt’s collaboration with private diagnostic companies

Meanwhile, Dr. Gauri Agarwal – Founder & Director, Genestrings Diagnostic and Seeds of Innocence is of the view that the government’s collaboration with the private sector, while refocusing on life science, healthcare, and diagnostics, will play a critical role in deciding the future of diagnostics in the country.

“Public Private Partnership models as have been proposed earlier by National Health Authority, are promising initiatives of mutual efforts, whereby models for partnership with private diagnostic companies were proposed for bettering the infrastructure, services and quality of testing in Tier II and Tier III Indian Cities. We advocate the principle of introducing high end molecular/genetic testing at a micro level in Indian Cities for reducing the difficulties in accessing quality testing and for strengthening regional medical infrastructure at a micro level. We further are staunch believers of developing indigenous testing technologies, medical devices and related infrastructure to promote an environment of Research and Development in this field. Accordingly, with the help of the Government’s grants, we can collectively formulate and implement cheaper alternatives to expensive genetic testing.”

Increase medical insurance premium deduction

A Ganesan, Group Vice Chairman, Neuberg Diagnostics, is not happy with the increase in medical insurance premium by the insurance companies in view of the Covid pandemic, which is threatening to become an endemic

Stating that they have increased the premium quietly, he opined that the insurance premium deduction has to be appropriately increased for all classes.

He also demanded medical expenditure deduction for senior citizens. “Currently, those who do not have a healthcare cover, are entitled to claim up to Rs 50,000 towards medical expenditure incurred. There are a number of people who do not have a health cover, particularly, those above 60 years. This section of people has again dealt with a body blow due to the pandemic. In view of the above, this limit has to be increased substantially or at least up to Rs 1,00,000,” he said.

Finance minister Nirmala Sitharaman would be presenting the Union Budget 2022-23 on February 1. Last year, she delivered the budget in paperless format. The government has not yet announced the format for presentation of this year’s budget.

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