Result of government’s efforts to boost domestic production of High value Formulations, Critical APIs and High-End Medical Devices in the first year of production of PLI schemes
“Working on the vision of reducing import dependency through indigenous production, Government of India is focussing on production of high value pharma and high-end medical devices. Manufacturing of components of high-end medical devices in the country will be another big step in moving towards Aatmanirbharta.”
Dr Mansukh Mandaviya stated this while appreciating the efforts of the applicants selected under the scheme. The Department of Pharmaceuticals (DoP) has released the first tranche of incentives under the Product Linked Incentive (PLI) scheme of pharmaceuticals amounting to Rs 166 crore to four selected applicants, yesterday.
Under the Atmanirbharta initiative of the government, Department of Pharmaceuticals launched the PLI scheme for pharmaceuticals in 2021. 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 & Medium Enterprises (MSMEs). The financial year of 2022-2023 being the first year of production for the PLI scheme, DoP has ear-marked Rs 690 crore as the budget outlay.
With an objective to enhance India’s manufacturing capabilities and contributing to product diversification towards high value goods in the pharma sector, 3 different categories of products are being supported under the scheme, viz,
- 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, anti-infective drugs, cardiovascular drugs, psychotropic drugs and anti-retroviral drugs, including In vitro diagnostic devices (applicable to 5 applicants out of 55 applicants);
The incentives on incremental sales to selected participants under these categories are at varying rate over the years ranging from 10 per cent to 3 per cent (tapering at last two years of the scheme).
Against the expected investment of Rs 17,425 crores in the pharma sector over the scheme period, the scheme has garnered an investment of Rs 16,199 crores by these 55 applicants in the first year of implementation itself. Against the expected employment of 1 lakh over six years scheme period, 23,000 persons have been given employment, so far.
Based on the information submitted by the applicants, about Rs 2200 crore incentives (out of total outlay of 15000 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 850 crore of incentive claims before the end of March 2023.
The department has received an incentive claim of about Rs 544 crore from 15 applicants. Based on the evaluation, Rs 221 crore of claims of incentives from four applicants viz, Dr Reddy’s Laboratories, Biocon, Strides Pharma Science, Premier Medical Corporation were found to be eligible and 75 per cent of this amount i.e., Rs 165.74 crore have been released. Remaining incentives are under examination.
As of January 31 2023, sales of about Rs 36,000 crore have been reported by the select 55 applicants.
The Department of Pharmaceuticals also implements two other PLI schemes, namely PLI for Bulk Drugs and PLI for Medical Devices, which have achieved significant milestones in the first year of implementation.
- Under the PLI scheme for Bulk Drugs with a financial outlay of Rs 6940 crore, the objective is to boost domestic production of 41 select critical bulk drugs in the country. So far, 51 projects have been selected for the 34 notified bulk drugs. Out of this, 22 projects have been commissioned till date (for the projects of fermentation based APIs, the production year as per the scheme guidelines is coming 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.
- Against a committed investment of Rs 4,138 crore over the scheme period of six years under the scheme, an investment of Rs 2019 crores have been reported so far and remaining will be realised in the coming year. Bulk Drugs such as 1,1 Cyclohexane Diacetic Acid (CDA), Para Amino Phenol (raw material for paracetamol), Sulfadiazine, Atorvastatin, Carbamazepine, Oxcarbazepine, Levofloxacin etc., have reported sales in this FY.
- Employment has been provided to about 1900 persons under the scheme.
- Under the PLI scheme for medical devices with a financial outlay of Rs 3,420 crore, a total of 21 applicants have been selected. The objective of this scheme is to establish domestic manufacturing capability of high-end medical devices under four target segments:
- Cancer care/radiotherapy medical devices
- Radiology & Imaging medical devices (both ionizing & non-ionizing radiation products) and Nuclear Imaging devices
- Anaesthetics & Cardio-Respiratory medical devices including Catheters of Cardio Respiratory Category & Renal Care medical devices
- All Implants including implantable electronic devices
- Against a committed investment of Rs 1059 crore over the scheme period of five years an investment of Rs 714 crores have been reported. Till 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 scan, MRI Coil, Linear Accelerator (LINAC), C-Arm, Ultrasonography, Dialysis Machine, Intensive care ventilators, Knee implants, Hip Implants, Heart valves, Stents, Dialyzer etc.
- Some of these medical devices are being domestically manufactured for the first time in the country. Thus, the PLI scheme has paved the way for an ecosystem for domestic manufacturing of these high-end medical devices.
- About 2900 persons have been employed under the scheme.