New Delhi: The Department of Pharmaceuticals (DoP) on Tuesday released the first tranche of incentives under the Product Linked Incentive (PLI) scheme for pharmaceuticals, amounting to Rs 166 crore. The four selected applicants to receive the first tranche of incentives include Dr Reddy’s Laboratories Limited, Biocon Limited, Strides Pharma Science Limited, and Premier Medical Corporation Private Limited.
While appreciating the efforts of the applicants selected under the scheme, Dr Mansukh Mandaviya, Union Health and Family Welfare Minister, said, “Working on the vision of reducing import dependency through indigenous production, Government of India is focusing on production of high value pharmaceuticals and high-end medical devices. Manufacturing of components of high-end medical devices in the country will be another big step in moving towards “Atmanirbharta.”
The DoP has received an incentive claim of about Rs 544 crore from 15 applicants. Based on the evaluation, Rs 221 crore of claims for incentives from four selected applicants were found to be eligible, and 75 per cent of this amount, i.e., Rs 165.74 crore, has been released by the department. The government is reviewing the remaining incentives.
With the Government of India (GoI) aiming to enhance India’s manufacturing capabilities and contribute to product diversification towards high value goods in the pharmaceutical sector, three different categories of products are being supported under the scheme. These include Category 1: Biopharmaceuticals; Complex generic drugs; Patented drugs or drugs nearing patent expiry; Cell based or gene therapy drugs; Orphan drugs; Special empty capsules, Complex excipients, Category 2: Bulk drugs (except those 41 eligible products notified under “PLI Scheme for Bulk Drugs”) and Category 3: Drugs not covered under Category 1 and Category 2 such as repurposed drugs; auto immune drugs; anti-cancer drugs; anti-diabetic drugs; cardiovascular drugs; psychotropic drugs; and anti-retroviral drugs, including in vitro diagnostic devices (applicable to 5 applicants out of 55 applicants).
According to the DoP estimates, the incentives on incremental sales to selected participants under these categories have varied over the years ranging from 10 per cent to 3 per cent, tapering at last two years of the scheme.
Falling in line with Dr Mandaviya’s emphasis on reducing the important dependency on the medical devices, the DoP in a seperate PLI scheme for Medical Devices laid a financial outlay of Rs 3,420 Crore. A total of 21 applicants have been selected for this by the DoP. The goal of this scheme is to establish domestic manufacturing capability of high-end medical devices in four target segments: cancer care and radiotherapy medical devices; radiology and imaging medical devices (both ionising and non-ionizing radiation products); nuclear imaging devices; anaesthetics and cardio-respiratory medical devices, including cardio-respiratory catheters; and renal care medical devices.
Against a committed investment of Rs 1,059 crore over the scheme period of five years, an investment of Rs 714 crore has been reported. To date, 14 projects have already been commissioned for 34 products. The medical devices being manufactured under the PLI scheme include high-end medical devices such as CT scans, MRI coils, linear accelerators (LINAC), C-arms, ultrasonography, dialysis machines, intensive care ventilators, knee implants, hip implants, heart valves, stents, dialyzer etc.
Paving the way for an ecosystem for domestic manufacturing of these high-end medical devices, the government of India (GoI) claims that some of these medical devices are being domestically manufactured for the first time in the country. PLI scheme employment figures show that 2900 people have been hired through the scheme.
Under the PLI scheme for bulk drugs, a financial outlay of Rs 6,940 crore has been assigned with the objective of boosting domestic production of 41 select critical bulk drugs in the country. As per the GoI, 51 projects have been selected for the 34 bulk drugs notified so far. Out of this, 22 projects have been commissioned to date (for the projects involving fermentation-based APIs, the production year as per the scheme guidelines is FY 2023–24 only). Incentive rates for fermentation-based products are 20 per cent and chemical-based products are 10 per cent for initial four years of the scheme and it will taper for subsequent two years.
The government’s press statement said that against a committed investment of Rs 4,138 crore over the scheme period of six years under the scheme, an investment of Rs 2,019 crore has been reported so far, and the remaining will be realised in the coming year. This fiscal year saw sales of bulk drugs such as 1,1-Cyclohexane Diacetic Acid (CDA), Para Amino Phenol (raw material for paracetamol), Sulfadiazine, Atorvastatin, Carbamazepine, Oxcarbazepine, Levofloxacin, and others. The government claims around 1900 persons have been provided employment under the scheme.
The DoP launched the PLI scheme for pharmaceuticals in 2021, as part of expanding the Atma Nirbharta initiative of the government. The financial outlay under this PLI scheme is Rs 15,000 crore over a period of six years. So far, 55 applicants have been selected under the scheme, including 20 micro, small, and medium enterprises (MSMEs). The DoP has budgeted Rs 690 crore for the fiscal year 2022-2023, the first year of production for the PLI Scheme.
Against the expected investment of Rs 17,425 crores in the pharmaceutical sector over the scheme period, the scheme has garnered an investment of Rs 16,199 crores from these 55 applicants in the first year of implementation itself. Against the expected employment of 1 lakh over the six-year scheme period, 23,000 people have been given employment, so far.
Based on the information submitted by the applicants, about Rs 2,200 crore in incentives (out of a total outlay of Rs 15,000 crore under the scheme) will be claimed based on the expected sales in FY 2022–23. Out of this, applicants are expected to file an incentive claim of about Rs 850 crore before the end of March 2023. As of January 31, 2023, sales of about Rs. 36,000 crore have been reported by the select 55 applicants.