Impact of Union Budget 2025-26 on Pharmaceutical Industry

The Union Budget 2025-26 has brought several significant changes that are set to impact the pharmaceutical industry in India. With a focus on healthcare infrastructure, R&D incentives, and policy reforms, the budget aims to strengthen the sector and drive innovation. But how do these measures shape the future of the pharma industry? Let’s dive into the key takeaways.

2/3/20252 min read

Key Budget Highlights Affecting Pharma

1. Increased Allocation for Healthcare and Pharma R&D

The government has announced a substantial increase in healthcare expenditure, with a dedicated portion for pharmaceutical research and innovation. This move is expected to boost drug discovery, vaccine development, and biotech advancements.

2. Tax Incentives for Pharmaceutical Companies

To encourage investment in R&D, the budget introduces enhanced tax deductions for pharmaceutical firms engaging in research activities. This is likely to incentivize both domestic players and global investors to set up research centers in India.

3. Support for Generic and Biosimilar Drugs

With a continued push towards affordable healthcare, the government has announced policies to support the manufacturing and distribution of generic drugs and biosimilars. This will help in making life-saving medications more accessible while also boosting exports.

4. Expansion of Production-Linked Incentive (PLI) Scheme

The PLI scheme for pharmaceuticals has been expanded to cover more drug categories, including APIs (Active Pharmaceutical Ingredients) and high-value drugs. This initiative is expected to enhance domestic manufacturing and reduce dependency on imports.

5. Strengthening of Regulatory Framework

The budget emphasizes the need for a streamlined regulatory environment, ensuring faster drug approvals and improving quality standards. This move will help pharmaceutical companies bring new drugs to market more efficiently.

6. Focus on Digital Health and AI in Pharma

A notable highlight is the allocation for digital healthcare initiatives, including the integration of Artificial Intelligence (AI) in drug discovery and patient care. This investment will drive the adoption of technology-driven solutions in the pharma industry.

Implications for the Pharmaceutical Industry

  1. Growth in Domestic Manufacturing: With increased financial support and incentives, India’s pharmaceutical sector is poised for growth, reducing reliance on imported raw materials.

  2. Boost in R&D Activities: Enhanced funding and tax breaks will encourage companies to invest more in innovative drug development and advanced therapeutics.

  3. Affordable Medicines for All: Policies promoting generics and biosimilars will contribute to lower drug prices and improved healthcare accessibility.

  4. Global Competitiveness: Strengthening the regulatory framework and digital health initiatives will improve India’s standing in the global pharmaceutical market.

Conclusion

The Union Budget 2025-26 presents a mix of opportunities and challenges for the pharmaceutical industry. Increased funding for R&D, tax incentives, and policy support for generic drugs and digital healthcare are set to accelerate industry growth. As companies adapt to these new reforms, India is likely to solidify its position as a global pharmaceutical powerhouse in the coming years.