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production linked incentive for pharma sector

https://pib.gov.in/PressReleasePage.aspx?PRID=1700434

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved Production Linked Incentive (PLI) Scheme for Pharmaceuticals over a period of Financial Year 2020-21 to 2028-29.

The Scheme will benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of wider range of affordable medicines for consumers.

The scheme is expected to promote the production of high value products in the country and increase the value addition in exports.  Total incremental sales of Rs.2,94,000 crore and total incremental exports of Rs.1,96,000 crore are estimated during six years from 2022-23 to 2027-28.

The scheme is expected to generate employment for both skilled and un-skilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.

It is expected to promote innovation for development of complex and high-tech products including products of emerging therapies and in-vitro Diagnostic Devices as also self-reliance in important drugs.  It is also expected to improve accessibility and affordability of medical products including orphan drugs to the Indian population.  The Scheme is also expected to bring in investment of Rs.15,000 crore in the pharmaceutical sector.

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. 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.

The salient features of the Scheme are as follows:-

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 meetthe objectives of the scheme. The qualifying criteria for the three groups of applicants will be as follows-

(a) Group A: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods more than or equal to Rs 5,000 crore.

(b) Group B: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods between Rs 500 (inclusive) crore and Rs 5,000 crore.

(c) Group C: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods less than Rs 500 crore. A sub-group for MSME industry will be made within this group, given their specific challenges and circumstances.

Quantum of Incentive:

The total quantum of incentive (inclusive of administrative expenditure) under the scheme is about Rs 15,000 crore. The incentive allocation among the Target Groups is as follows:

(a)          Group A: Rs 11,000 crore.

(b)          Group B: Rs 2,250 crore.

(c)           Group C: Rs 1,750 crore.

The incentive allocation for Group A and Group C applicants shall not be moved to any-other category. However, incentive allocated to Group B applicants, if left underutilized can be moved to Group A applicants.

Financial Year 2019-20 shall be treated as the base year for computation of incremental sales of manufactured goods.

Category of Goods:

The scheme shall cover pharmaceutical goods under three  categories as mentioned below:

  1. Category 1

Biopharmaceuticals; Complex generic drugs; Patented drugs or drugs nearing patent expiry; Cell based or gene therapy drugs; Orphan drugs; Special emptycapsules like HPMC, Pullulan, enteric etc.; Complex excipients; Phyto-pharmaceuticals: Otherdrugs as approved.

(b)Category 2

Active Pharmaceutical Ingredients / Key Starting Materials / Drug Intermediates.

(c)Category 3 (Drugs not covered under Category 1 and Category 2)

Repurposed drugs; Auto immune drugs, anti-cancer drugs, anti-diabetic drugs, anti-infective drugs, cardiovascular drugs, psychotropic drugs and anti-retroviral drugs; In vitro diagnostic devices; Other drugs as approved; Other drugs not manufactured in India.

Rate of incentive will be 10% (of incremental sales value) for Category 1 and Category 2 products for first four years, 8% for the fifth year and 6% for the sixth year of production under the scheme.

Rate of incentive will be 5% (of incremental sales value) for Category 3 products for first four years, 4% for the fifth year and 3% for the sixth year of production under the scheme.

The duration of the scheme will be from FY 2020-21 to FY 2028-29. This will include the period for processing of applications (FY 2020-21), optional gestation period of one year (FY 2021-22), incentive for 6 years and FY 2028-29 for disbursal of incentive for sales of FY 2027-28.

Background:

Indian pharmaceutical industry is 3rd largest in the world by volume and is worth USD 40 billion 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 USA, UK, European Union, Canada etc. India has a complete ecosystem for the development and manufacturing of pharmaceuticals with companies having state of the art facilities and highly skilled/technical manpower. The country also has a number of renowned pharmaceutical educational and research institutes and a robust support of allied industries.

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

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revised guidelines to promote domestic production of bulk drugs

https://pib.gov.in/PressReleasePage.aspx?PRID=1668347

Union Department of Pharmaceuticals, Ministry of Chemicals and fertilizers has revised the Production Linked Incentive (PLI) Schemes for promoting domestic manufacturing of bulk drugs and medical devices keeping in view the suggestions and comments received from the industry. Accordingly ‘minimum threshold’ investment requirement has been replaced by ‘committed investment’ taking into account availability of technology choices which varies from product to product.

The Department of Pharmaceuticals earlier come out with the following two Production Linked Incentive schemes-

Production Linked Incentive scheme for promotion of domestic manufacturing of critical Key Starting Materials, Drug Intermediates and Active Pharmaceutical Ingredients in India

Production Linked Incentive Scheme for Promoting Domestic Manufacturing of Medical Devices

Both the schemes were approved by the Cabinet on 20.03.2020 and the detailed guidelines for the implementation of the schemes were issued by the Department on 27.07.2020.

Post issuance of the detailed guidelines, the department received several suggestions and inputs from the pharmaceutical and medical device industry seeking certain amendments in the scheme to enable effective participation of the industry in the two schemes. The suggestions were examined by the respective Technical Committees formed under the schemes. The recommendations of the Technical Committees were placed before the Empowered Committees of the schemes which are chaired by CEO NITI Aayog. After considering the recommendations of the Technical committees, the EC approved the revision of the guidelines for both the schemes. Accordingly, the revised guidelines have been issued today viz 29.10.2020 and are available on the website of the Department of Pharmaceuticals under the tab “schemes”.

The main changes which have been effected in the revised guidelines for Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of critical Key Starting Materials, Drug Intermediates and Active Pharmaceutical Ingredients in India are as follows:

Replacement of the criteria of ‘minimum threshold’ investment with ‘committed’ investment by the selected applicant. The change has been made to encourage efficient use of productive capital as the amount of investment required to achieve a particular level of production depends upon choice of technology and it also varies from product to product. The provision for verification of the actual investment made by the selected applicant for the purpose of giving incentives under the scheme continues.

Deletion of the provision which restricts the sales of eligible products to domestic sales only, for the purpose of eligibility of receiving incentives, bringing the scheme in line with other PLI schemes and encouraging market diversification.

Change in the minimum annual production capacity for 10 products viz Tetracycline, Neomycin, Para Amino Phenol (PAP), Meropenem, Artesunate, Losartan, Telmisartan, Acyclovir, Ciprofloxacin and Aspirin. Minimum annual production capacity is a part of eligibility criteria under the scheme.

The last date for receiving applications under the scheme is now extended by a week to 30.11.2020 (inclusive)

Similarly, the main changes which have been effected in the revised guidelines for Production Linked Incentive Scheme for Promoting Domestic Manufacturing of Medical Devices are as follows-

Replacement of the criteria of ‘minimum threshold’ investment with ‘committed’ investment by the selected applicant. The change has been made to encourage efficient use of productive capital as the amount of investment required to achieve a particular level of production depends upon technology used and it also varies from product to product. The provision for verification of the actual investment made by the selected applicant for the purpose of giving incentives under the scheme continues.

Change in the eligibility criteria of minimum sales threshold in line with projected demand, technology trend and market development, for the purpose of availing incentive under the scheme.

The tenure of the scheme has been extended by one year keeping in view the capital expenditure expected to be done by the selected applicants in FY 2021-22. Accordingly, the sales for the purpose of availing incentives will be accounted for 5 years starting from FY 2022-2023 instead of FY 2021-2022.

The last date for receiving applications under the scheme is now extended by a week to 30.11.2020 (inclusive)

The Indian pharmaceutical industry is the third largest globally in terms of volume and contributes significantly to India’s economic growth and export earnings. The Medical Devices industry is identified as a sunrise sector with great potential for diversification and employment generation. The Government of India has launched several initiatives to support the Pharmaceutical and Medical Devices industry to reach their potential in the coming years.

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