 "Sudarshan Jain")
Pharmaceuticals and medical devices are a vital pillar of the health infrastructure for any country's preventive and curative health system. The importance of the pharmaceutical sector in contributing to drug security, i.e., making essential drugs available at affordable prices, has gained universal recognition, particularly since the Covid-19 pandemic. Hence, providing a long-term stable policy environment for the pharmaceutical and medical device sector is imperative. This implies making India sufficiently self-reliant in end-to-end indigenous drug and medical device manufacturing.
The Indian pharmaceutical industry has been a consistent and reliable provider of high-quality and affordable medical products to India and the world at large. The value of the output of manufacturing pharmaceutical, medicinal chemicals and botanical products (PMCBP) has more than doubled to around Rs 5.8 trillion in 2021-22 from around Rs 2.34 trillion in 2013-14 (at current prices). This implies a compound annual growth rate (CAGR) of 12 per cent over the last nine years, the highest among all manufacturing sectors of our economy and the highest among the drug and pharmaceutical sectors worldwide. To cap it all, the share of PMCBP in manufacturing value added was also higher at 7.4 per cent compared to its share in total manufacturing output at 3.9 per cent over the last three years. Thus, the pharmaceutical industry has become a significant driver of manufacturing growth for our economy.
In pursuance of the clarion call of "Atmanirbhar Bharat" by the prime minister, the Indian government launched the production-linked incentive (PLI) schemes in multiple sectors to boost manufacturing by leveraging cutting-edge technology and core competencies. Considering a futuristic view of our product profile, it perceives a shift in our role from being "recipients" to "contributors" of the global value chains. The PLI schemes envisage the disbursement of incentives to fulfil incremental investment and sales thresholds prescribed in respective scheme guidelines. The timing of the intervention is reflected in the strategic de-risking of global supply chains in medical products in the wake of the supply chain disruptions due to the pandemic and recent geo-political developments.
While India has been an exporter of some bulk drugs and drug intermediates, there existed severe import dependence for selected bulk drugs. In order to boost self-reliance, the Department of Pharmaceuticals has successfully implemented the PLI scheme for promoting domestic manufacturing of critical Key Starting Materials (KSMs)/ Drug Intermediates (DIs)/ Active Pharmaceutical Ingredients (APIs) with an outlay of Rs 6,940 crore for 41 eligible bulk drugs. These consist of fermentation-based bulk drugs with an incentive rate of 20 per cent for the first four years, 15 per cent for the fifth year and 5 per cent for the sixth year (2023-24 to 2028-29) and chemical synthesis-based bulk drugs with an incentive rate of 10 per cent for six years viz., 2022-23 to 2027-28. It is heartening to note that production of 89,545 million tons per annum has been committed under the 48 approved projects and we are steadily progressing to boost domestic production of critical bulk drugs such as Para Amin Phenol, Atorvastatin, Carbamazepine, Levodopa, Levetiracetam, Acyclovir, Prednisolone, Vitamins, and Diclofenac Sodium, to name a few.
The second PLI scheme in this sector is the PLI scheme for pharmaceuticals (also called PLI 2.0), which enhances India's manufacturing capabilities by diversifying into higher-value drugs like complex generics, biologicals and biosimilars. The eligible products under this scheme are divided into three categories, which include high-value pharmaceuticals such as biopharmaceuticals, complex generics, cell-based or gene therapies, orphan drugs, complex excipients, phytopharmaceuticals, repurposed drugs, autoimmune drugs, cardiovascular drugs, psychotropic drugs, anti-retroviral drugs, anti-cancer drugs, anti-diabetic drugs, anti-infective drugs and in-vitro diagnostics. The scheme has a financial outlay of Rs 15,000 crore. An investment of Rs 17,275 crore was committed by 55 successful participants under this scheme, against which an actual investment of Rs 27,453 crore has already been realised as of December 2023, signalling strong Keynesian "animal spirits". Approximately 3,800 unique products are manufactured under the scheme, which characterises a robust product diversification of our value chains.
The Indian medical device industry has also received heightened attention from policymakers over the past decade. This sector, often touted as a sunrise sector, is now growing rapidly, and its potential growth is the highest among all the healthcare sector sectors. Indian medical devices market stood at $10 billion in 2020 and is expected to be valued at $30 billion by 2030. As is well known, the industry showed resilience in ramping up production of essential medical devices and diagnostics during the Covid-19 pandemic. Medical device exports and imports were Rs 27,273 crore and Rs 60,204 crore, respectively, in 2022-23. To reduce import dependence on critical medical devices, the Department of Pharmaceuticals is implementing the PLI Scheme for medical devices across 4 product segments, viz., cancer care; radiology and imaging; anaesthetics, cardio-respiratory and renal care; and body implants, including implantable electronic devices. 138 medical devices, which were earlier almost fully imported, will now be manufactured in India under this scheme.
In brief, the PLI schemes in the pharma-meditech sectors have been a resounding success, and they've heralded a new era for our industry to foray into hitherto unchartered areas and become global champions in the coming days. We must celebrate this moment as we inaugurate 40 greenfield projects for bulk drugs and medical devices under the PLI Scheme from the headquarters of the Federation of Indian Chamber of Commerce and Industry on March 2, 2024.
The writer is secretary general of the Indian Pharmaceutical Alliance (IPA)
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