India’s vaccine delivery has brought laurels for the Indian pharmaceutical industry. Even global bodies like United Nations have made a special mention, acknowledging both the political leadership and the industry. To put it in business terms, the brand visibility of India’s pharmaceutical industry is at its apex globally, and there is no better time to optimise it for India’s advantage.
With the announcement of Production Linked Incentive (PLI) Schemes in this sector, the Modi government is making the best out of this situation.
The Scheme in Gist
Production Linked Incentive (PLI) Scheme for Pharmaceuticals over a period of Financial Year 2020-21 to 2028-29. By encouraging domestic and foreign manufacturers who establish their production units in India, this PLI initiative aims at ushering innovation for the development of complex and high-tech products, including products of emerging therapies and in-vitro Diagnostic Devices as well as self-reliance in important drugs.
The Goods That Get Boost
The scheme shall cover pharmaceutical goods under three categories as mentioned below:
Category 1: Biopharmaceuticals; Complex generic drugs; Patented drugs or drugs nearing patent expiry; Cell based or gene therapy drugs; Orphan drugs; Special empty capsules like HPMC, Pullulan, enteric etc.; Complex excipients; Phyto-pharmaceuticals: Other drugs as approved.
Category 2: Active Pharmaceutical Ingredients / Key Starting Materials / Drug Intermediates.
Category 3: Repurposed drugs; Auto immune drugs, anti-cancer drugs, anti-diabetic drugs, anti-infective drugs, cardiovascular drugs, psychotropic drugs and anti-retroviral drugs; In vitro diagnostic devices; Other drugs as approved; Other drugs not manufactured in India.
Three Groups within the Industry
So, what kind of companies can apply for this PLI scheme to avail incentive on their sales volume?
This is also categorised across three groups.
India’s MSME sector working in the pharma sphere gets an opportunity under group C, with a provision for a sub-group in this category.
Rate of incentive will be 10% (of incremental sales value) for Category 1 and Category 2 products for first four years, 8% for the fifth year and 6% for the sixth year of production under the scheme.
Rate of incentive will be 5% (of incremental sales value) for Category 3 products for first four years, 4% for the fifth year and 3% for the sixth year of production under the scheme.
PLI in Pharma – The Numbers
- The scheme is expected to bring in investment of ₹15,000 crore in the pharmaceutical sector.
- Total incremental sales of ₹2.94 lakh crore and total incremental exports of ₹1.96 lakh crore are estimated during six years from 2022-23 to 2027-28.
- Employment generation estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.
The Earlier Initiative
Earlier, Production Linked Incentive (PLI) Scheme for Bulk Drugs and PLI Scheme for Medical Devices have shown a positive response. The closing date for the application was November 30, 2020. 215 applications made by 83 pharmaceutical manufacturers have been received under the PLI Scheme for bulk drugs. Similarly, 28 applications made by 23 medical device manufacturers have been received under the PLI Scheme for medical devices.
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