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Nandita Vijay, Bengaluru March 16 , 2023
The production linked incentive (PLI) scheme will boost the competitiveness of the Indian pharma manufacturing, said Sunil Thakur, partner, Quadria Capital.

The PLI scheme was launched by the central government to promote domestic manufacturing and reduce the dependence on imports, especially from China. It was designed to create a conducive environment for the production of high-value products in India and enhance the global competitiveness of the Indian pharmaceutical industry. The scheme aims to promote the production of active pharmaceutical ingredients (APIs), key starting materials (KSMs), and drug intermediates, which are currently being imported from other countries, he added.

It will also generate employment opportunities and lead to technology transfer and innovation. The government has set a target of Rs. 2 lakh crore of incremental sales from the scheme, which will result in a significant boost to the Indian pharmaceutical industry. However, there are several hurdles that the industry and the government need to overcome to ensure the success of the PLI scheme and its ability to generate incremental sales, he said.

We see that the current incentive is mostly limited to manufacturing for a capacity that, at best, meets domestic market need whereas for long term sustainability of these new capacities (beyond PLI incentive years), one needs to produce at a global scale to remain globally competitive, Thakur told Pharmabiz.

One of the main challenges faced by the Indian pharmaceutical industry is lack of infrastructure for the production of APIs and KSMs. The infrastructure required for the production of these materials is expensive and requires high-level technology. The lack of such infrastructure makes it difficult for Indian companies to compete with global players. Setting up new infrastructure requires a significant investment, which may not be feasible for smaller companies, he said.

Further, the implementation of the PLI scheme requires the approval of several government departments and agencies. This bureaucratic process can be time-consuming and may delay the implementation of the scheme. The approval process needs to be streamlined to ensure timely implementation of the scheme.

Moreover, the production of APIs and KSMs requires a skilled workforce with knowledge of the latest technologies. The Indian pharmaceutical industry currently lacks a sufficient number of skilled workers. The industry needs to invest in training programs to build a skilled workforce to operate the high-tech equipment required for the production of APIs and KSMs, noted Thakur.

The government needs to balance the need for affordable medicines with the need for a profitable pharmaceutical industry. This is because government has a policy of controlling the prices of essential medicines to ensure affordability for the general public. The price controls may affect the profitability of companies that produce these medicines, making it difficult for them to invest in the production of APIs and KSMs, he said.

Yet, even as PLI for pharmaceuticals is a step towards making India self-reliant it is also fraught with several challenges that need to be addressed for the scheme's success. The regulatory framework needs to be balanced to ensure compliance without hampering innovation and growth. The pharmaceutical industry needs to work with the government to overcome these challenges and make the PLI scheme a success, he said.

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