Union Budget 2022: As Union Finance Minister Nirmala Sitharaman is scheduled to present Union Budget 2022 on February 1, the healthcare and diagnostics sector has pinned hope of an increase in the allocation in view of the pandemic that has been full of transitions. Health, at present, has become the biggest priority for people and nations alike. In India, the pandemic exposed several gaps in the existing healthcare infrastructure. However, the government has been quick to come up with reforms and policy levels to address the issues.
As per the Union Budget 2021-22, the total public health sector allocation stood at 1.2 per cent of the gross domestic product (GDP). According to the FICCI and KPMG report titled ‘COVID-19 Induced Healthcare Transformation in India’, released late last year, the country needs to raise public health spending to 2.5 – 3.5 per cent of GDP to support healthcare transformation. “With a healthcare spending of 1.5 per cent of India’s Gross Domestic Product (GDP) in 2018-19, there is a need to increase the public health spending to 2.5 – 3.5 per cent to support healthcare transformation,” said the report and highlighted the need to incorporate alternative financing models to address the financial gaps in the health sector.
When it comes to policy level, the government issued a notification about the retail sale of drugs at doorstep, issued telemedicine guidelines, 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. To increase competitiveness and improve the availability and affordability of medical devices, a scheme for the creation of four Medical Device Parks was also introduced The government also announced the launch of the National Digital Health Mission (NDHM).
On January 16, 2021, Prime Minister Narendra Modi launched the Covid vaccination drive for two domestically produced vaccines — Covishield and Covaxin. Despite all these efforts, the healthcare industry is still in need of better support for sustained growth. Here are some of the expectations of the healthcare industry from Union Budget 2022-23.
Ashok Patel, CEO and Founder Max Ventilator, India’s leading ventilator manufacturer, said that apart from the need to raise the share of healthcare as a proportion of GDP to at least 2.5 per cent in the upcoming budget, the government must also further build on its earlier policy incentives such as PLI schemes and dedicated medtech parks by increasing allocations.
Investment In Genetic & Genomic Research
“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. Given the repeated occurrences of infectious diseases of epidemic scale in recent years, the government should also invest sufficiently into genetic and genomic research, epidemiology and vaccine research besides increasing allocation for broader healthcare R&D,” Patel said.
The diagnostics and preventive health device segment must be given as much policy and financial support as possible, he said.
Nikkhil K Masurkar, Executive Director, ENTOD Pharmaceuticals, said that the pharmaceutical and medical devices industry has gained a significant momentum owing to the government’s AatmaNirbhar Bharat initiative. The Union Budget 2022 is expected to build on the Production Linked Incentive (PLI) schemes and encourage continued investments in capacity expansion of sensitive APIs, drug intermediates, complex excipients, biopharmaceuticals and medical devices.
Focus On In-House R&D
“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,” Nikkhil said.
Interaction with industry and global players can help India’s pharmaceutical sector to move from a generic manufacturer to an innovator developer and manufacturer for the world. Apart from that, Technology/digital transformation is another key area of focus. In fact, it would be the building block for the much-expected universal healthcare in India.
Presently, GST on drugs is taxed under four categories – nil, 5%, 12% and 18%. 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% deduction in tax on in-house R&D,” he said.
Boost To Telemedicine,Digital Healthcare Sector
Another sector that talks in recent times are the telemedicine sector where experts are expecting more specific allotments in the budget and help in the growth of the sector. Telemedicine has the potential to improve access to healthcare in remote and rural areas. Home-based healthcare can reduce burden on limited healthcare facilities.
Vikram Thaploo, CEO of Apollo Telehealth, said that digital health along with various innovations should be encouraged. 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 advanced healthcare facilities in these areas.
“India is combating a massive global pandemic with its resources available in the health sector. The health sector is 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,” Vikram said.
“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,” he added.
Medical expenses have increased over the past two years with Covid taking center stage. Many have lost jobs or have taken pay cuts, resulting in financial stress on families. Industry experts believe that to ease these problems, the government needs to make digital healthcare affordable.
“A special focus on making health insurance affordable by reducing GST on premiums from 18% to 5% is a viable option. The government should make health insurance applicable for telehealth services such as doctor consultations or online physiotherapy to help patients recover from the comfort of their home. This is crucial for patients who can’t visit a doctor due to Covid restrictions,” Darpan Saini, CEO, Phyt.health said.
Moreover, the Finance Minister could also look to increase the limit of deduction under Section 80D from Rs 50k to 1 lakh – this could help the common man combat the rising healthcare costs, he added.