Explained: Rs 15,000 Crore PLI Scheme For Pharmaceutical Companies That Aims To Achieve 'Atmanirbharta' In APIs And High-End Medicines

The Union Cabinet, chaired by Prime Minister Narendra Modi on Wednesday (24 February) approved a Rs 15,000 crore Production Linked Incentive (PLI) Scheme to promote domestic manufacturing of high value products in pharmaceutical sector.

The PLI scheme for Pharmaceuticals will implemented over a period of eight years - from financial year 2020-21 to 2028-29. The government will incentivise the producer firms by paying anywhere between 5 to 10 per cent of the the yearly incremental output based on the category of pharmaceutical product.

While Indian pharmaceutical industry is 3rd largest in the world by volume and is worth USD 40 billion in terms of value and contributes 3.5 per cent of total drugs and medicines exported globally, it is mostly low value generic drugs that account for the major component of Indian exports. A large proportion of the domestic demand for patented drugs is still met through imports. The import dependence is due to Indian Pharmaceutical lacking capability in high value production along with the necessary pharma R&D.

The PLI scheme for pharmaceutical sector is aimed at incentivising the global and domestic players to enhance investment and production in diversified product categories including 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.

The PLI scheme seeks to promote innovation for development of complex and high-tech products including products of emerging therapies and in-vitro Diagnostic Devices. It is also expected to improve accessibility and affordability of medical products including orphan drugs to the Indian population.

The PLI Scheme, which is expected to bring in investment of Rs.15,000 crore in the pharmaceutical sector, is applicable to three categories of firms:

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

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

(c) Group C: Firms 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.

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

(a) 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: Other drugs as approved.

(b) Active Pharmaceutical Ingredients / Key Starting Materials / Drug Intermediates.

(c) 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.