Four pharmaceutical companies have received the first tranche of incentives of up to ₹165.74 crore under the Product Linked Incentive (PLI) scheme of the Department for Pharmaceuticals. The scheme was floated to boost indigenous production of active pharmaceutical ingredients which are the key raw materials in manufacturing drugs.
The firms are Dr. Reddy’s Laboratories Limited, Biocon Limited, Strides Pharma Science Limited and Premier Medical Corporation Private Limited.
“The Department has received an incentive claim of about ₹544 crore from 15 applicants. Based on the evaluation, ₹221 crore of claims of incentives from four applicants were found to be eligible and 75% of this amount i.e., ₹165.74 crore has been released. Remaining incentives are under examination,” the Department of Pharmaceuticals said in a press statement.
The incentives on incremental sales to selected participants under these categories are at a varying rate over the years ranging from 10% to 3% (tapering in the last two years of the scheme).
The goverment launched the PLI scheme for pharmaceuticals in 2021 with a financial outlay of ₹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, the Department of Pharmceuticals has earmarked ₹690 crore as the budget outlay.
Against the expected investment of ₹17,425 crore in the pharmaceutical sector over the six-year scheme period, the scheme has garnered an investment of ₹16,199 crore by the 55 applicants in the first year of implementation.
As of January 31 2023, cumulative sales of about ₹36,000 crore has been reported by the selected 55 applicants.
These include the first category of biopharmaceuticals, complex generic drugs, patented drugs or drugs nearing patent expiry, cell-based or gene therapy drugs, orphan drugs, special empty capsules and complex excipients. The second category includes bulk drugs (except those 41 eligible products notified separately under PLI scheme for bulk drugs) and the third category includes drugs not covered under Category 1 and Category 2 such as repurposed drugs, autoimmune 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).
Under the PLI scheme for bulk drugs with a financial outlay of ₹6,940 crore to boost domestic production of 41 select critical bulk drugs, 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 active pharmaceutical ingredients, the production year as per the scheme guidelines is FY 2023-24).
The incentive rates for fermentation-based products are 20% and chemical-based products are 10% for initial four years of the scheme and it will taper for the last two years, the government has said.
“Against a committed investment of ₹4,138 crore over the scheme period of six years under the scheme, an investment of ₹2,019 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 financial year,” the statement said.
Further under the PLI scheme for medical devices with a financial outlay of ₹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 and radiotherapy medical devices, radiology and imaging medical devices (both ionizing and non-ionizing radiation products) and nuclear imaging device, anaesthetics and cardio-respiratory medical devices, renal care medical devices and all implants.
“Against a committed investment of ₹1,059 crore over the scheme period of five years, an investment of ₹714 crore have been reported. Till date, 14 projects have already been commissioned for 34 products,” the statement said.
The medical devices being manufactured under the PLI scheme include high-end 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, etc. Some of these medical devices are being domestically manufactured for the first time in the country.
