PLI Scheme for pharma helps India substitute 35 imported raw materials

The Production Linked Incentive (PLI) scheme for the pharmaceutical sector launched two years ago has started yielding results as 35 imported active pharmaceutical ingredients (APIs) or key chemicals that are responsible for the therapeutic effect of drugs, are now being developed in India.

A total of 239 applications were received under the PLI Scheme for pharma, of which 49 applicants were selected for 32 products. The total committed investment was ₹3,685.38 crore and the actual investment of ₹774.88 crore took place by 49 approved applicants till December 2021 in all segments. Now 35 APIs have begun production at 32 plants across India in March 2022, said a report by Infomerics, an accredited credit rating agency.

For the pharma sector, the government has earmarked over $2 billion worth of incentives to start producing 53 APIs for which India relies heavily on China. India’s $42 billion pharmaceutical sector is heavily dependent on China for the APIs and various estimates say India’s dependence on China is about 70%-90% for these critical raw materials. The tenure of the scheme is from FY 21 to FY 29. Promotion of innovation for the development of complex and high-tech products, including products of emerging therapies and diagnostic devices, have also been targeted under the scheme.

These APIs include commonly used drugs like anti-high blood pressure drugs like Valsartan, Losartan and Telmisartan. The drugs now manufactured in India also include drugs like anti-infectants Levofloxacin, Sulfadiazine, Ciprofloxacin, Ofloxacin and anti-pain drugs like Diclofenac Sodium, anti-seizure drug Levetiracetam, and Levodopa and Carbidopa, which are used to treat the symptoms of the Parkinson's disease. These are made by companies like Honour Lab, Hetero Drugs, Surya Life Sciences, Sreepathi Pharmaceuticals, Amoli Organics, Hetero Drugs, etc.

The report said the Foreign Direct Investment (FDI) in the pharmaceutical sector is also witnessing a growth. In FY 2022 (April-September), the FDI inflows were ₹4,413 crore, 53% over the corresponding period in FY 2020-21. The Department of Pharmaceuticals approved 10 FDI proposals worth ₹7,860 crore inflows under the brownfield pharmaceutical projects during the financial year 2021-22 (till December 2021).

The 'Promotion of Bulk Drug Parks', with an outlay of ₹3,000 crore for selected bulk drug units to access common infrastructure facilities, is another attraction for investors in this sector. The scheme will be active for 5 years from FY 2020-21 to FY2024-25. Out of the total outlay, 70% of the project cost of common infrastructure facilities will be given to a selected Bulk Drug Park as a financial assistance. In case of north-eastern states and hilly states (Himachal Pradesh, Uttarakhand, Jammu & Kashmir and Ladakh), financial assistance would be 90% of the project cost. The maximum assistance under the scheme for one Bulk Drug Park would be limited to ₹1,000 crore, said the report.