Indian pharmaceutical companies are anticipating tax breaks and financial support for research into novel medications as Prime Minister Narendra Modi's administration prepares a federal budget, expected to be unveiled in July. This budget will mark Modi's initial significant policy statement in his third term as Prime Minister. Experts emphasize that Indian drug producers must concentrate on advancing beyond standard generics to more complex medications to maintain the country's reputation as the 'pharmacy of the world' for its cost-effective medicines.

Krishna Ella, Chairman of Bharat Biotech, suggested during a recent event in Hyderabad that income tax exemptions for 5-10 years on new molecules developed in India could stimulate innovation at the grassroots level, encouraging companies to invest in research. Bharat Biotech is renowned for creating Covaxin, India's first indigenous COVID-19 vaccine. With its pharmaceutical market projected to reach $130 billion by the end of the decade, India ranks as the world's third-largest drug producer by volume, behind the United States and China, and is a major producer of generic drugs.

Bernstein, a research firm, highlighted in March the necessity for India to establish a domestic market where innovative drugs can be profitable at reasonable prices. The firm cautioned that investing heavily in clinical trials without pricing power is not a viable business model for pharmaceutical companies. Additionally, Bernstein advocated for insurance coverage for new drugs and harmonized regulatory standards for manufacturing and clinical trials to promote innovation. Although India has offered incentives since 2020 to boost manufacturing across various sectors, novel drug manufacturers have not yet been included.

Partha Saradhi Reddy, Chairman of Hetero Drugs, expressed optimism that the government is assessing the effectiveness of its current schemes and anticipates a policy to enhance research and development in the industry. India's pharmaceutical exports, particularly to the US generics market, are forecasted to double to $55 billion by 2030, according to the Pharmaceuticals Export Promotion Council of India (Pharmexcil). Raja Bhanu, Director General of Pharmexcil, emphasized the need for innovative approaches to maintain India's global prominence in the pharmaceutical sector.