Govt Budget Boost To Healthcare: A Strategic Move To Boost Domestic Manufacturing

Sambhav Kumar Jul 30, 2024

To develop sustainable strategies, the FY25 has witnessed a 12.9 per cent increase from the revised estimate of Rs.80,517.62 crore

The allocation of the budget of Rs 90,658 crore to the health sector aims to boost the robust health care system in India. In order to develop sustainable strategies, the FY25 has witnessed a 12.9 per cent increase from the revised estimate of Rs.80,517.62 crore.
To enhance the domestic capability of the Indian Pharma Industry, Finance Minister Nirmala Sitaraman announced the exemption of custom duty on three cancer medicines and reduced the duty on crucial medical equipment. Is the latest budget allocation boost domestic manufacturing in the healthcare sector and benefit patients?

“One of the cancer medications, trastuzumab deruxtecan, is mostly used to treat lung cancer in addition to breast cancer. It's a very new kind of drug and the price before the announcement of the budget was approximately around 1.78 lakh rupees per 100 mg and is normally given in around three weekly cycles. The dose of the drug is 5.4 mg per kg bodyweight,” said Dr Ullas Batra, Co-Director, Department of Med Oncology and Chief of Thoracic Medical Oncology, Rajiv Gandhi Cancer Institute and Research Centre (RGCIRC).

According to Dr Batra, osimertinib is another drug that is used in lung cancer and its approximate cost is 10 lakh rupees per year. Durvalumab is a drug that is used predominantly in lung cancer but it is also used in gallbladder cancer. The approximate cost of this drug is around 15 to 16 lakh rupees for one year treatment. “The exemption of customs duty on cancer medicines post-budget is anticipated to benefit a large number of patients because these drugs are out of reach for most people, and lowering the price will benefit poor patients who cannot afford these drugs” said Dr Batra.

“We would like the government to look at incentivizing R&D for new medicines and medical devices. Aside from this, we hope the government will enforce a law requiring doctors’ prescriptions to include drug names rather than specific brands. These changes can certainly help the country move towards a Viksit Bharat. We hope the government could take this into consideration in the coming months,” Siddharth Gadia, Co-Founder, Zeno Health stated.

Reduction In Duties On Crucial Medical Equipment

Aiming to boost domestic manufacturing, the centre has announced revisions in custom duties on crucial medical equipment, including X-ray tubes and flat panel detectors used in medical X-ray machines. Government has reduced the duty from 15 to 5 per cent until March 31, 2025. Following this, the duty will be gradually increased to 7.5 per cent for the period April 1, 2025, to March 31, 2026, and eventually return to the original rate of 10 per cent from April 1, 2026, onwards.

“The notable shift in this budget lies in its potential to stimulate domestic manufacturing. The removal of customs duty on components for X-ray tubes and digital detectors is anticipated to enhance the domestic production of digital X-ray machines in India. By offering tax incentives and regulatory support for medical device production, the government is laying the groundwork for a more self-reliant healthcare ecosystem,” said Joy Chakraborty, Chief Operating Officer, P. D. Hinduja Hospital and Medical Research Centre.
“This strategy not only aims to reduce dependency on imports but also to create a robust local industry, potentially lowering costs and improving access to essential medical equipment,” added Chakraborty.

Increase In The Funding Of National Health Mission

The budget allocation for the National Health Mission (NHM) has also been significantly boosted, with an increase of approximately Rs 4,000 crore, from Rs 31,550 crore to Rs 36,000 crore, for the financial year 2024-25.

The National Health Mission (NHM) aims to ensure that all individuals have access to comprehensive, affordable, and high-quality healthcare services that meet their needs, by providing support to states and union territories to enhance their healthcare infrastructure and services, promoting accountability.

Boosting Domestic Manufacturing Through PLI Scheme

If we talk about the PLI scheme, the government has given a boost to the pharmaceutical industry by more than doubling the allocation for the Production Linked Incentive (PLI) scheme, from Rs 1,200 crore in the previous year to Rs 2,143 crore, aiming to accelerate the growth in domestic manufacturing.

The Production Linked Incentive scheme is a government initiative designed to encourage and support domestic manufacturing by offering financial incentives, thereby promoting growth in local industries.

“The government's recent healthcare budget allocation represents a strategic move that extends beyond simple fiscal adjustments. The establishment of the 'Anusandhan National Research Fund' underscores a commitment to fostering innovation in the healthcare sector. This investment in research and development is expected to encourage healthcare institutions, start-ups, and entrepreneurs to pursue research-driven manufacturing capabilities within India. Consequently, this initiative has the potential to yield improved treatment methods and cutting-edge medical technologies, positioning India at the forefront of medical advancements,” Chakraborty stated.

Industry experts and healthcare professionals have welcomed the latest budget allocation, but also highlighted the need for further reforms, such as incentivizing R&D and enforcing laws to promote generic drug use. If executed well, these budgetary measures may boost the domestic capacity of the healthcare sector in India.