By Prathiba Raju and Abhijeet Singh
New Delhi: The Finance Minister Nirmala Sitharaman, who presented her seventh consecutive Union Budget 2024-25, which intended to satisfy the appetite of one of the world’s fastest-growing economies, seems to have tasted sour to the country’s health sector experts. Despite some small alterations in custom duty tax on cancer drugs and X-ray machine components, the buzz term ‘reform in healthcare’ was notably absent in FM’s one hour twenty-seven minute long budget speech. The term “health” struggled to find its place among the top nine priorities listed by the government.
Dissecting the budget further and doing a more comprehensive analysis along with obtaining key takeaways for the healthcare industry ETHealthworld convened a webinar with the top echelons of the industry on the topic, “Budget 2024: Healthcare Outlook The Hits and Misses.”
The panelist for the session were Anil Matai Director General, The Organisation of Pharmaceutical Producers of India (OPPI); Vishal Bali, Executive Chairman, Asia Healthcare Holdings; Anurag Yadav CEO, Gleneagles Healthcare India; Dr Shuchin Bajaj, Founder Director, Ujala Cygnus Hospital; Rajiv Nath, Managing Director, Hindustan Syringes & Medical Devices Ltd & Forum Coordinator, AiMeD; Dr.Rajib Dasgupta, Professor, Centre of Social Medicine & Community Health, JNU,Editor, Indian Journal of Public Health and the session was moderated by Vikas Dandekar Editor (Pharma & Healthcare), ET Prime and co-moderated byPrathiba Raju, Assistant Editor Digital Content at The ETHealthworld.
Giving his opening remarks over the increment of 12.59 per cent allocation for the healthcare in the budget Dr Dasgupta said, “There are some improvements such as the increased allocation of the department of research, state drug regulatory system, health technology assessment and PM-JAY; the overall allocation to the Department of Health and Family welfare is not very different in comparison to 23-24.”
Responding to the question about his views on the healthcare allocations in the Union Budget 2024, Vishal Bali expressed his discontent. He said, “I am extremely disappointed because year after year we are looking to the government to provide a focused agenda on healthcare for this country, which could be reflected in the budget allocation. But over the last couple of years—between 2022-23, 2023-24, and now—from 2.4 percent, which was the post-COVID recovery period, to 1.9 percent of the GDP, it shows there is no focused agenda for the healthcare of the country. Healthcare is a core pillar of a developed nation, but if the outlays keep reducing, I don’t know where we are heading in healthcare.”
Voicing a similar stance, another expert from the hospitals segment, Yadav said, “The focus is missing, we are at around 1.9 per cent of GDP at a time when the country is poised to become the third largest economy, healthcare has to go to every nook and corner of the country. Although 13 per cent increase is there but it is not sufficient 2.5 per cent of the GDP is minimum. The Government should now focus on comprehensive healthcare and we need to move towards preventive healthcare where there should be a basic healthcare check-up for everyone above 50 years. This year the eastern region is in focus which is a good start but is far behind the expectations.”
Representing the medical device industry, Nath said, “We were expecting much more to come forward we have been very thankful one particular aspect that was the rescheduling of the phased manufacturing programme for medical electronics X-ray equipments where the government has been responsive but we were hoping for a scheme where the medical device manufacturers will be allowed to modernise their plants seek global regulatory approvals and competitiveness which could have improved the quality of products. The Government could have focused on rationalising duties from 10-15 per cent.”
Expressing his dissatisfaction in strong words another panelist Dr Bajaj stressed, “For healthcare this has been one of the dampest budgets I have ever seen. And it is really disappointing, we have been listening to the promise of three per cent but I think this will go below 1.25 per cent. If we are aiming for a five trillion dollar economy, the health of the country needs some focus and the time has come we should have a separate healthcare budget like we used to have for railways.”
Commenting that the decisions to exempt custom duty in three cancer drugs may not be massive but a welcome step, Matai said, “We commend the government to improve healthcare access and innovation but the High time has come that we need to have some action oriented -supportive policies to truly encourage innovation. Right sound bytes are coming and with some level of patience fine prints will come. The exemption of custom duty on three cancer drugs helps towards making advanced care treatments a little more accessible.”
Touching upon the massive demand-supply gap in healthcare infrastructure and talent, including doctors, nurses, and technicians, Bali said,”Despite numerous new medical colleges being established, many struggle to achieve full fruition due to a shortage of teaching faculty. This demand-supply imbalance is a result of decades of underinvestment, especially from the public side. While the private sector is investing heavily, which is crucial, there is a pressing need for indigenization in medical technology. The government must focus on developing indigenous technologies to bridge this gap and create an affordable healthcare ecosystem. This approach could mirror the success seen in the pharmaceutical and software technology sectors.”
Highlighting why the Budget was a diappointment for healthcare segent, Bali remarked, “When we talk about affordability, we should consider the push for national schemes like Ayushman Bharat, which was fundamentally intended to make healthcare affordable for citizens. However, the fact that Ayushman Bharat hasn’t even been mentioned in two consecutive budgets suggests it might not have been designed for long-term sustainability. If we look at countries with established healthcare systems, such as the NHS in the UK, which, despite being underfunded, has a significant budget to provide healthcare to a large portion of its population, it highlights the issue. In India, we lack a cohesive plan that brings all the components of healthcare together effectively. This lack of a unified agenda means that the sector fails to achieve its ultimate goals.”
“Furthermore, if things continue as they are, we cannot simply blame the private sector for charging market rates. Every technology is imported, and investors and corporations are dealing with inflationary costs every year to bring state-of-the-art healthcare technologies to India. Bridging the affordability gap will require creating a robust ecosystem within the country to manage these challenges effectively. This is where I believe we have significant gaps.” Bali stated.
“Every technology is imported and investors are spending an inflationary cost to bring these technologies home and how we are going to create an ecosystem which is able to take weight within the country needs to be focused,” he added.
“Overall in the medical device sector the ratio of imports to exports is more than two times and in the last five years it has only come down to 2.3 times to 2.1 times, the difference is going to come from real technology either buying it or investing in joint ventures and having technical collaborations. Last year the government has already announced a policy, what we want is action on that policy such streamlining regulatory framework devices cannot be regulated as drugs. The allocation has gone down from 100 to 85 crores rupees, for medical device parks the allocation has come down from 200 to 150 crore rupees,” Rajiv Nath voiced while touching upon the medical device segment.
Underlining the problem of lack of utilisation of allocated funds Dr Dasgupta emphasised, “As far as direct healthcare is concerned the goal of 2.5 per cent of GDP we are falling short and something to flag is that where it is actually spend if you look at the actual expenditure of 2022-23 and revised expenditure of 2023-24 there isn’t a significant which highlights the lack of utilisation capacity at the state level, i.e., even after 20 years of the National Rural Health Mission (NRHM) which was mean to bring managerial cadres, energise architecture so these are some difficult questions which are need to be addressed certainly in the implementation phase.”
“Statistics reveal themselves, amid the recommendations of doubling the expenditure of NHM there has been a mere increase of 0.4 per cent there is a very small incremental change the intend seems to be good but the governments needs to encourage private bodies to take healthcare to small towns, villages which right now don’t have any kind of incentives.” Dr Bajaj responded over the increase in allotment of PLI funds for Pharma.
Commenting on a query about whether the mechanism chosen to make drugs affordable is appropriate or not Dr Dasgupta said, “To make drugs available at affordable prices would come from insurance mechanism whether public or private on the other hand the support for the senior citizens insurance scheme has seen a decline in comparison to previous allocation it was 25 crores is now down to 0,1 crore so is being subsumed under PM-JAY that could be a logic but in the public health needs there isn’t much to cheer for Infant In the National Health Mission which subsumes all national health schemes there is no significant increase.”
Over the announcement of revision of custom levy on X-Ray tubes and flat panels Nath said, “It’s a strategic move and we (medical device industry) want it to be replicated for other products in the same manner. To the best of my knowledge around Rs. 2,500 crore worth of X-ray equipment is being currently imported so still there is room for import substitution.”
Concluding the session Matai called for “higher tax deduction for R&D expenditure and research linked incentives to change India from a generic player to move towards specialisation.”
