Cabinet clears ₹15,000-crore PLI scheme for pharma industry

In an earnest attempt to change India’s image as a manufacturer and exporter of low-value drugs, the government on Wednesday announced a Rs 15,000 crore production linked incentive (PLI) scheme for promoting manufacture of high value products in pharmaceutical sector. 

The scheme, approved by the Union Cabinet, will be available for three different categories of firms. While those who had a global manufacturing revenue of Rs 5,000 and above in 2019-20 will be classified as Group A, those between Rs 5,000 and Rs 5,00 crore as Group B and those up to Rs 500 crore as Group C. The quantum of incentives available to those in Group A is a total of Rs 11,000 crore, While Group B and Group C firms will get a total incentive of Rs 2,250 crore and Rs 1,750 crore respectively.

India currently accounts for 3.5 per cent of global pharma exports and this year, the value of Indian pharma exports is slated to touch $25 billion. 

The PLI scheme will be implemented over eight years beginning in 2020-21 and will lead to an creation of 20,000 direct and 80,000 indirect jobs. It is expected to benefit domestic manufacturers besides making available wider range of affordable medicines for Indians.

High expectations

It is meant to promote innovation for 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. Besides, it is also expected to improve accessibility and affordability of medical products including orphan drugs to the Indian population, an official statement said.  

The scheme will be part of the umbrella scheme for the Development of Pharmaceutical Industry. The objective of the scheme is to enhance India's manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods in the pharmaceutical sector. Another objective of the scheme is to create global champions out of India who have the potential to grow in size and scale using cutting edge technology and thereby penetrate the global value chains, the statement said. 

The companies will be able to work on three different categories of pharmaceutical goods. While the first category will include biopharmaceuticals such as complex generic drugs, patented drugs, cell-based or gene therapy drugs, phyto-pharmaceuticals and orphan drugs, the category 2 would be for active pharmaceutical ingredients, key starting materials and drug intermediaries. The Category 3 would be for those drugs which are not covered in the first two categories and this would include repurposed drugs, autoimmune drugs, anti-cancer drugs, anti-diabetic, cardiovascular drugs and others. It will also consider in vitro diagnostic devices as well. 

Commenting on the scheme, Shuchi Ray, Partner, Deloitte India, said it is a well-thought one. "The incentives to different category of entities (large, mid-size and MSMEs) will engage the industry players at large. The scheme aiming at incentivising the global and Indian players to invest in high value drugs, viz. complex generics and bio-pharmaceuticals, will not only improve accessibility and affordability of drugs in India, but will also exploit the available R&D talent and skills in India,” Ray said.

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