New PLI scheme to boost self-sufficiency in drugs
NEW DELHI: The Union government has expanded its performance-linked incentive (PLI) scheme to the pharmaceutical sector, aiming to achieve selfsufficiency in output of drugs. Often called the pharmacy of the world, the country has struggled to keep up enough supplies of key drugs to treat Covid-19 infections, exacerbating a second wave in April and May that has since ebbed.
The window for applications from drug manufacturers for the scheme worth ₹15,000 crore opened on June 2 and will continue till July 31, an official of the the chemicals and fertilizers ministry, which oversees pharmaceuticals, said on condition of anonymity.
With massive production capacities, India is the world’s largest manufacturer of generic drugs. But even as it has built its expertise in formulations and so-called small molecules, the country has been content to stop manufacturing bulk drugs.
The PLI scheme offers eligible manufacturing companies and sectors a 4-10% incentive on incremental sales over the base year of 2019-20 for a five-year period. When a firm achieves a given sales target, it also qualifies for the incentive.
The PLI scheme for pharmaceuticals and medical devices will sort applications into three groups based on the global manufacturing revenue of FY 2019-20 of the applicants, according to the guidelines of the scheme. The focus is to ramp up supplies of APIS as well as finished drugs.
Small and medium enterprises will have an assured place in the scheme so that they can achieve scale.
Eligible medical products under the scheme include formulations, biopharmaceuticals, active pharmaceutical ingredients, key starting material, drug intermediates, and in-vitro diagnostic medical devices.
“The category-1 and category-2 products can get a 10% incentive and category-3 products a 5% incentive on incremental sales,” the official cited in the first instance added.
Some economists have argued that within the industry, sectors suffered supply disruptions during 2019-20 from China. Since the industry began shifting supply lines away in 2020, the “base year of 2019-20” in the PLI scheme need to be updated to 2020-21, they point out.
The base year is not simply a cut-off date, said economist Pronab Sen. It has far-reaching consequences. “The PLI scheme captures (sales) milestone over a base year of production. If you change the base year to 2021 from the existing 2020, then you can tackle a lot of these sourcing issues,” he said.
“One area that deserves attention is that ramping up of API manufacturing should not lead to a diversion of current capacity away from manufacturing of finished drugs,” said Prateek Sinha, a health economist with the Wellbeing Economy Alliance.
“We had the advantage to produce APIS but somehow lost it to China, but we can regain it. We are still trying to understand various aspects of the PLI scheme.,” said Mahesh H Doshi, president of the All-india Drug Manufacturers’ Association.