Govt to release guidelines on ₹150 billion pharma incentive scheme in March

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Indian formulation manufacturers import majority of their bulk drug from China (Bloomberg)Indian formulation manufacturers import majority of their bulk drug from China (Bloomberg) 3 min read . Updated: 25 Feb 2021, 07:38 PM IST Leroy Leo The new scheme is aimed at encouraging the pharmaceutical industry to move up the value chain by investing in R&D of complex generic medicines and novel therapeutics, pharmaceutical secretary said The scheme is on the lines of another PLI scheme worth 69.4 bn announced last year

New Delhi: The central government plans to release guidelines for the 150 billion production linked incentive scheme for the pharma sector in March, pharmaceutical secretary S. Aparna told Mint.

“Now that we have Cabinet approval, we will issue guidelines. Formulating the guidelines will take a month or so. During that time, we will interact with the industry... We might issue the guidelines by the end of March and then call for applications," Aparna said, adding that the government will then give them two to three months to apply although the deadline for that has not yet been finalised.

Unlike the earlier PLI scheme which was aimed at boosting India's bulk drug security, the new scheme is aimed at encouraging the pharmaceutical industry to move up the value chain by investing in research and development of complex generic medicines and novel therapeutics, she said.

"This scheme has a wider range... This is for enhancing manufacturing capabilities, diversifying the product mix to complex generics, patented drugs and going up the value chain, bringing some investment and eventually creating global champions," Aparna said.

The new scheme is more extensive and could boost pharma production over a longer term, Aparna said.

On Wednesday, the Union Cabinet approved a new PLI scheme for pharmaceuticals for the period of 2021-29. The new scheme will provide a total of 150 billion in investment over a nine-year period till March 2029 for an equivalent quantum of investment in biopharmaceuticals, complex generic drugs and patented drugs, gene therapy medicines, orphan drugs as well as in-vitro diagnostics. It will also cover a larger range of bulk drugs and repurposed medicines.

“The whole idea of moving into higher-value, more complex products is to incentivise R&D. Earlier, there was tax breaks for R&D. Now this one is incentivising R&D by incentivising a certain category of products which require certain investments in R&D," she said.

The scheme is on the lines of another PLI scheme worth 69.4 billion announced last year for over 40 key bulk drugs like penicillin G, paracetamol, among others.

Last month, Aurobindo Pharma and two other companies were selected to set up plants for making four bulk drugs, including penicillin G, 7-ACA and erythromycin thiocyanate. It is expected to get nearly 3,600 crore incentives earmarked for the four drugs over the next six years.

Under the new scheme, a technical committee will select companies based on whether they manufacture drugs in broader categories like phyto-pharmaceuticals and gene therapies instead of specifying molecules like penicillin G and 7-ACA as it was in the earlier scheme, she said.

“Then, we addressed a long-felt gap because we were facing a crisis, whereas this is much-more extensive, has deeper implications and looks more towards long term," Aparna said.

When the earlier scheme was announced in March, Indian pharmaceutical companies had just come out of a crisis, where there was concern over supply of bulk drugs from China following a country-wide lockdown due to the start of covid-19 pandemic. Indian formulation manufacturers import majority of their bulk drug from China.

In 2019-20, India imported 5,970 crore worth of bulk drugs from China, which was 72% of the total imports of 8,247 crore, the government informed the Lok Sabha in September.

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