There is also a strong call for linking R&D investments and price benefits under the Drug Price Control Order (DPCO) in line with the recommendations of the Mashelkar Committee report. The 14-member Mashelkar Committee has, among other things, suggested new and innovative fiscal and non-fiscal measures to boost pharma R&D.

Industry experts say that innovative R&D financing--including venture capital funding--was necessary given the high risk and high investment required in pharmaceutical research projects. Internationally, taking a drug from discovery stage to the market can involve $250-500 million (over 12 years) while in India this could cost up to Rs 200 crore.

Sun Pharma managing director Dilip Shanghvi said, "The Indian pharmaceutical industry is underprice control and its ability to undertake R&D is linked with cash flows. So, if funding is possible, there would be more investment in research".

Internationally, venture capital funds provide seed capital for start-ups, and new drug discovery projects essentially via special purpose vehicles (SPVs), though in India, this route is fraught with bottlenecks.

Cipla's whole-time director Amar Lulla said that R&D-intensive companies should be given certain leeway to commit resources for research. "Price control serves as a disincentive. R&D-intensive companies must be given price benefits for drugs under the purview of the DPCO, if they fulfill criteria like cGMP approval for their facilities etc," he said.

The Mashelkar Committee report has suggested five "gold standards" that need to be achieved for a "R&D intensive" company to qualify for benefits under the DPCO. These include a minimum R&D spend of 5 per cent of turnover and the grant of at least 10 patents for R&D done in India before filing anapplication for DPCO relaxation.

Lupin Labs director Nilesh Gupta said that industry was also looking forward to a massive tax reduction on R&D expenses, besides a total duty exemption on imports of consumable and capital goods that go into R&D activities. "The Government should not tax IPR-based earnings including income earned from transfer of technology, royalty income. A corpus for research and venture capital financing would be ideal to support pharmaceutical R&D efforts," he added.