The Indian pharmaceutical industry is the third-largest in volume across the world and contributes to 3.5 percent of total medicines and drugs exported to more than 200+ countries. In light of the massive disruptions across the pharmaceutical sector caused by the pandemic, and to boost the capacity of domestic manufacturing of critical drugs, the government has recently introduced the product-linked incentive (PLI) scheme for the pharmaceutical sector.
This is the second PLI scheme in pharma sector; the earlier one was introduced on 21st July 2020. The new scheme will provide Rs15,000 crore in total as financial incentives for the chosen pharmaceutical products. This initiative by the government will not only help in the manufacturing of high-tech and complex pharmaceutical products within India but also be a huge growth driver for the industry creating additional jobs and sources of employment. The PLI scheme estimates that it will lead to the creation of 80,000 indirect and 20,000 direct jobs due to the growth and expansion of the sector over 6 years.
The key objectives of PLI are to make sure there is a sustainable domestic supply and proper availability of drugs and medicines at affordable prices; to enhance the growth of the pharmaceutical industry through investments; and to reduce the country's dependence on other countries to procure raw materials for the production of pharmaceutical products.
For many years, the pharmaceutical industry of India has been heavily reliant on China for raw materials or APIs . According to the Trade Promotion Council, India’s API reliance on China was estimated to be 85 per cent. However, with the introduction of the PLI scheme, production of around 35 APIs has already begun across 32 plants in India. This will reduce India's dependence on China by up to 35 percent before the end of this decade.
Another area of concern has been India’s dependence on other countries for medical equipment. As per reports, India imports $1.5 billion worth of medical equipment from China. These include machines or imaging technology to perform MRI and other types of scans.
To address the same, India has also introduced a scheme for the promotion of Bulk Drug Parks. The scheme will provide a financial outlay of Rs 3,000 crore for 3 select states, which will be responsible for providing infrastructural assistance to the API players. This will further enable to reduce import\ dependence on APIs and strengthen the current infrastructure facilities. Easy access to infrastructural facilities and standard testing will certainly aid the domestic drug industry to become much more competitive and take care of approval issues.
(Nikkhil Masurkar is the Executive Director of Entod Pharmaceutical)