PRODUCTION LINKED INCENTIVE SCHEME (PLI) FOR PHARMACEUTICALS

NEWS: Indian pharma to grow 10 times in next 25 years aided by government policies like PLI schemes.

BACKGROUND: Indian pharmaceutical industry often referred to as ‘Pharmacy of the World’ is the 3^rd largest in the world by volume and is USD 40 billion (14^th) in terms of value. The country contributes 3.5% of total drugs and medicines exported globally. India exports pharmaceuticals to more than 200 countries and territories including highly regulated markets such as the USA, The UK, European Union, Canada etc.

At present a major component of Indian exports are low value generic drugs while a large proportion of the demand for patented drugs is met through imports. This is because the Indian Pharmaceutical sector lacks in high value production along with world class pharma R&D. In order to incentivize the global and domestic players to enhance investment and production in these product categories, a well-designed and suitably targeted intervention to incentivize specific high value goods such as biopharmaceuticals, complex generic drugs, patented drugs or drugs nearing patent expiry, cell based or gene therapy drugs is envisaged.

OBJECTIVE:

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.

One of the further objectives 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.

SALIENT FEATURES:

• • It is a Central Sector Scheme.
  • Target groups: The manufacturers of pharmaceutical goods registered in India will be grouped based on their Global Manufacturing Revenue (GMR) to ensure wider applicability of the scheme across the pharmaceutical industry and at the same time meet the objectives of the scheme.

• Category of Goods: The scheme shall cover pharmaceutical goods under three categories as:

Category 1

1. Bio-pharmaceuticals

2. Complex generic drugs

3. Patented drugs or drugs nearing patent expiry

4. Cell based or gene therapy drugs

5. Orphan drugs

6. Special empty capsules like HPMC, Pullulan, enteric etc.

7. Complex excipients

8. Phyto-pharmaceuticals

9. Other drugs as approved

Category 2

1. Active Pharmaceutical Ingredients /Key Starting materials/Drug Intermediates

Category 3

1. Repurposed drugs

2. Auto immune drugs, anti-cancer drugs, anti-diabetic drugs, anti- infective drugs, cardiovascular drugs, psychotropic drugs and anti- retroviral drugs

3. In-vitro diagnostic devices

4. Other drugs as approved

5. Other drugs not manufactured in India.

• • Eligible investments include expenditure incurred on:
    • Research and development.
    • New plant, machinery, or equipment
    • Tranfer of technology (TOT)
    • Product registration
    • Construction of building
  • Empowered Group of Secretaries (EgoS): The Empowered Group of Secretaries (EgoS) comprising of Cabinet Secretary (Chairperson), CEO NITI Aayog (Member), Secretary DPIIT (Member Convenor), Secretary DoC (Member), Secretary DoR (Member), Secretary DEA (Member) and Secretary DoP shall undertake periodic review of the outgo under the scheme, ensure uniformity with other PLI schemes and take appropriate action to ensure that the expenditure is within the prescribed outlay.
  • Tenure: The tenure of the Scheme is from Financial Year 2020-21 to 2028-29.
  • Small Industries Development Bank of India (SIDBI) is recognized as the Project Management Agency.
  • The financial incentives provided on incremental sales over base year i.e. FY 2019-20.
  • Rates of incentives will be:
    • For Category 1 & 2: 10% initially to be successively reduced to 6%.
    • For Category 3: 5% initially to be successively reduced to 3%.
  • Tenure for incentive payment will be of maximum 6 years.