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DoP soon to release guidelines on Rs. 6,940 crore PLI scheme for domestic production of bulk drugs
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Shardul Nautiyal, Mumbai
July 13 , 2020
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The Department of Pharmaceuticals (DoP) is all set to release guidelines on the Rs. 6,940 crore Production Linked Incentive (PLI) scheme for domestic production of 53 pharmaceutical products out of the key 41 bulk drugs based on the multi-stakeholder consultation involving pharmaceutical industry, bulk drugs industry and regulatory authorities.
“Guidelines for the PLI scheme are all set to be released anytime soon as the technical committee’s final report along with industry recommendations has been submitted to the DoP. We are also taking ahead development of bulk drugs parks based on challenge method which implies that only states which guarantee maximum benefits to potential investors like good R&D facilities among others will be given chance to develop bulk drugs parks,” DoP secretary Dr P D Vaghela said.
The draft guidelines on PLI scheme were prepared by a technical committee, headed by the Joint Drugs Controller of India Dr S Eswara Reddy, constituted by DoP on April 17, 2020 after detailed consultations with industry, experts and other relevant stakeholders. Major objective of the PLI scheme is to reduce import dependency and boost domestic production of bulk drugs. Currently, India imports nearly 68 per cent of API, by value, from China. The import of APIs has risen at a CAGR of 8.3 per cent from 2012 to 2019 and the bulk drug import reached a value of Rs. 249 billion in 2019.
Earlier, the DoP had discussed draft guidelines for the Rs. 6,940 crore PLI scheme with representatives of the drug industry at a meet on June 13, 2020 to boost domestic manufacturing of critical key starting materials (KSMs)/drug intermediates (DIs)/active pharmaceutical ingredients (APIs) in India.
As a part of the plan to boost domestic drug manufacturing, DoP also has plans to set up bulk drugs parks in the country based on its ongoing consultations with potential states in the country in the wake of overdependence of poor quality Chinese imports. PLI scheme was first announced by the Union Cabinet in March. Key bulk drugs include penicillin-G, vitamin B1, prednisolone and diclofenac sodium among others. Out the 53 identified pharmaceutical products, 26 are fermentation based bulk drugs and 27 are chemical synthesis based bulk drugs. Rate of incentive will be 20% (of incremental sales value) for fermentation based bulk drugs and 10% for chemical synthesis based bulk drugs. A sum of Rs. 6,940 crore has been approved for the next 8 years.
Meanwhile, industry has welcomed PLI scheme and urged DoP to also revive existing API units which can produce chemical synthesis based bulk drugs to ensure that these API units don’t turn into non-performing assets (NPAs). “Indian Drug Manufacturers Association (IDMA) has recommended that in order to create domestic capacities, provision of minimum investment should be removed. This would allow existing ‘brown field’ units also to be able to take benefit under the PLI scheme by utilising spare capacity available with them or by changing product mix,” suggested Ashok Kumar Madan, executive director, IDMA.
PLI scheme is expected to reduce manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs. The scheme intends to boost domestic manufacturing of critical KSMs/drug intermediates and APIs by attracting large investments in the sector to ensure their sustainable domestic supply and thereby reduce India's import dependence on other countries for critical KSMs/drug intermediates and APIs.
It will lead to expected incremental sales of Rs. 46,400 crore and significant additional employment generation over 8 years.
PLI scheme will be implemented by State Implementing Agencies (SIA) to be set up by the respective state governments and target is to set up 3 mega bulk drug parks. The scheme will be implemented through a Project Management Agency (PMA) to be nominated by the DoP.
Common infrastructure facilities would be created with the financial assistance under the sub-scheme in 3 bulk drug parks. It is expected to reduce manufacturing cost and dependency on other countries of bulk drug in the country.
India is significantly dependent on import of basic raw materials, viz., bulk drugs that are used to produce medicines. In some specific bulk drugs the import dependence is 80 to 100%.
While Maharashtra, Gujarat and Karnataka are the front-runners, the Centre has also plans to set up bulk drug parks at Himachal Pradesh, Visakhapatnam, Ahmedabad and Tamil Nadu to boost bulk drug production in the country.
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