For the last two decades, the Indian pharmaceutical industry has been growing almost 1.5 times the Indian GDP. The current government has an aggressive plan of amplifying the industry size from $41 billion to almost $120-150 billion in 2030. Globally, India has benchmarked its position in formulation development and manufacturing. However, India’s dependence on China (primarily) and a few other countries for importing active pharma ingredients (APIs) to manufacture drugs is a problem that looms large in the Indian pharma sector’s path to progress.
This problem was magnified due to the outbreak of the COVID-19 pandemic and long lockdowns. The industry faced numerous barriers regarding the import of APIs over the past one-and-a-half years. While there were delays initially, it became almost impossible to import the APIs in the later stages. This has made it imperative to bring an end to this inordinate dependence on China and other countries for APIs and raw materials as soon as possible.
Acknowledging the fact that API manufacturing and research and development (R&D) are the areas that need impetus, the Government of India, launched the Product Linked Incentive (PLI) schemes – PLI 1.0 (in 2020) and PLI 2.0 (in early 2021) – in the hope that it will make the Indian pharma industry more robust and self-reliant for APIs and other key starting materials (KSMs).
The story so far
As of March 2021, the Centre had approved 33 applications, with a committed investment of Rs 5,082.65 crores, under the PLI scheme for APIs. For these approved applications, the disbursal from the government over six years will be up to a maximum of Rs 5,440 crores. A total of 14 companies committed minimum/more than the minimum proposed annual production capacities. The setting up of these new facilities will lead to a fresh investment of over Rs 450 crores, and they will begin production by April 1, 2023. Overall, 215 applications were received across multiple segments within the API category. The government is in the process of taking up the remaining applications.
On paper, they definitely have the potential to give an impetus to API manufacturing and R&D but how have they fared on implementation? A few stakeholders share their views:
Dr Viranchi Shah, Senior Vice President, Indian Drugs Manufacturers Association (IDMA) informs, “Owing to past policies, the business of many APIs and intermediates had migrated out of India in the late 1990s and 2000s. The industry could have done better in handling that exodus.”
However, he is optimistic about the outcome of these schemes and is happy with their progress. He says, “PLI is a progressive, transparent, objective and well-structured scheme that aims to catalyse the growth and self-reliance of the Indian pharmaceutical industry, more specifically in API and R&D verticals. So far, under PLI1, which is specifically for imported APIs, the approvals have been granted for 36 out of 41 KSMs/APIs, with a minimum committed investment of over Rs 5,300 crores. Identification of investors for other KSMs/APIs is underway, and soon we hope that this will also be finalised. In a medium term of two-to-three years, we will see the benefits of these investments forthcoming for the industry, reducing our dependence and making Indian pharma truly Aatmanirbhar.”
He also informs, “PLI2 has been floated, and applications from the industry were sought before July 31. Seeing the current trends, a large number of industry players are likely to participate in PLI2.”
Dr Shah admits that there are few gaps and informs that IDMA has expressed its views whenever the gaps have been spotted. However, he also points out, “The authorities have responded positively and taken cognizance of its suggestions/objections. In most cases, the concerns have been addressed and the gaps have been closed.”
Citing an example, he informs, “We had raised the issue of a minimum investment of Rs 50 crores for the...
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