Biotech cos, herbal majors object to levy of 12.3% service tax on clinical trials in Union budget

Nandita Vijay | | Bengaluru | 21 July 2014

Bio-pharma companies, herbal drug majors and the Indian Society for Clinical Research (ISCR) have taken objection to the proposal to levy a service tax of 12.3 per cent as it can seriously hit the revenue generation and mar growth of the clinical trial industry. But the Clinical Trials Expert Committee chief Prof. Ranjit Roy Choudhury says that companies are more concerned about the slow pace of approvals for human studies than the service tax imposed.

For the last 18 months, clinical trial industry in the country is forced to survive in a volatile regulatory environment which has led to a drastic decline in the number of human studies conducted.

Companies like Biocon and The Himalaya Drug Company among others are dependent on human studies because most of their products are ethically promoted and require safety-efficacy data for clearances from the regulatory authority.

Despite the intent of ‘Health for All’ highlighted by the Finance Minister Arun Jaitley in his Union budget he chose to withdraw the service tax exemption on technical testing of new drugs, including vaccines and herbal remedies. Withdrawing the exemption on service tax and enforcing 12.3 per cent levy is viewed by the ISCR as a disincentive to undertake human studies in India. It has sent a wrong signal to the global community on the government’s commitment to promote research for better healthcare.

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