Production Linked Incentive scheme: Over a dozen bulk drug cos keen to apply says industry body

More than a dozen bulk drug companies are keen to set up manufacturing units under the government scheme designed to encourage local production of the basic raw materials that go into the making of medicines.

“The policy notified by the government is very encouraging;  already 15-20 of our member companies have expressed intent to apply for setting up manufacturing facilities," said VV Krishna Reddy, Director of Sri Krishna Pharma and President of Bulk Drug Manufacturers Association.

Reddy said that the Department of Pharmaceuticals has been conducting webinars to clarify industry doubts, after which the member companies will start sending in their applications.

Earlier this week, the Department of Pharmaceuticals notified two schemes under the umbrella of the Performance Linked Incentive (PLI) scheme.

The first of the schemes will provide financial incentives of around Rs 7000 crore to companies looking to set to factories for making Key Starting Materials, Drug Intermediates and Active Pharmaceutical Ingredients, as the basic raw materials are known in industry parlance.

These incentives will apply to companies making 41 products using the 53 APIs identified by the government.

The other scheme notified by the government is for promoting industrial parks for bulk drug producers.

The government will provide funds to create common infrastructure facilities in three bulk drug parks proposed by state governments.

The financial assistance for these bulk drug parks would be 70 percent of the project cost and for North Eastern States or hill states, the financial assistance would be 90 percent of the project cost. The maximum assistance for one Bulk Drug Park would be limited to Rs. 1000 crore, and the total outlay would be Rs. 3,000 crore from FY 2021 to FY 2025.

Experts feel that the move towards self-reliance will enable the pharma sector to plan better for development.

“India sources significant amounts of its raw material, active pharmaceutical ingredients and key starting material from China, and COVID 19 has bought an important realization about being self-sufficient and reducing external reliance," said Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co.

"The two schemes are a welcome measure, affirming the Government’s emphasis for the pharma sector, and making it self-sufficient.

The Government has also taken the initiative to promote bulk drug parks, and this will enable pharma sector to have a planned development and reduce the costs for setting up infrastructure as the Government intends to provide financial assistance for creation of common facilities like effluent treatment plants, captive power plants, steam and cooling systems, incubation facilities, common logistic facilities, advance common testing Centre, regulatory awareness facilitation centre and emergency response centre," he said.