How the Government of India is Empowering Indian Pharma Companies to Compete Globally

Introduction

The pharmaceutical industry in India has undergone a significant transformation over the past decade, emerging as a global leader in generic drug manufacturing, biotechnology, and active pharmaceutical ingredients (APIs) production. Recognizing the sector's potential to contribute to economic growth and public health, the Government of India (GoI) has implemented a series of strategic schemes and policies. These initiatives are designed to enhance competitiveness, foster innovation, and create a level playing field for Indian pharmaceutical companies on the global stage.

Government Schemes Over the Past Ten Years

The GoI has launched several schemes aimed at addressing various challenges in the pharmaceutical sector, such as infrastructural deficits, technological gaps, regulatory hurdles, and the need for innovation. Below is a detailed table summarizing these schemes, their objectives, budget allocations, and key outcomes.

Table 1: Overview of Government Schemes in the Pharmaceutical Sector (2013–2023)

Detailed Analysis of Key Schemes and Their Impact

1. Production Linked Incentive (PLI) Scheme

Objectives and Implementation

Launched in 2020, the PLI Scheme aims to reduce India's dependence on imported APIs and drug intermediates, primarily from China. The scheme provides financial incentives ranging from 5% to 20% on incremental sales of domestically manufactured products over the base year. It focuses on 53 critical APIs and key starting materials (KSMs).

Key Features

• Incentive Rates: 5%–20% based on the product category.
• Duration: Incentives available for six years starting from FY 2020–21.
• Eligibility: Manufacturers investing in greenfield projects with a minimum investment threshold.
• Total Incentives: INR 6,940 crore allocated for APIs and KSMs.

Case Study: Aurobindo Pharma

Aurobindo Pharma invested INR 3,000 crore under the PLI Scheme to establish new API manufacturing facilities. The company reported a 20% increase in API exports in FY 2021–22, attributing growth to the incentives and enhanced production capacity.

2. Promotion of Bulk Drug Parks

Objectives and Implementation

The scheme aims to develop three mega bulk drug parks in India with world-class infrastructure and common facilities, such as solvent recovery plants, distillation units, and effluent treatment plants. The goal is to achieve economies of scale and reduce manufacturing costs.

Key Features

• Financial Assistance: Up to INR 1,000 crore per park or 70% of the project cost (90% for hilly states).
• State Selection: States were selected based on proposals; Andhra Pradesh, Gujarat, and Himachal Pradesh were chosen.
• Implementation Timeline: Parks to be developed over five years, with a focus on environmental sustainability.

3. Promotion of Research and Innovation in Pharma MedTech (PRIP) Sector Scheme

Objectives and Implementation

Launched in 2022, the PRIP Scheme supports the creation of Centers of Excellence (CoEs) to promote research in pharmaceuticals and medical devices. It provides grants-in-aid to academia and research institutes for collaborative projects with industry partners.

Key Features

• Financial Support: Up to INR 100 crore per CoE.
• Focus Areas: Biopharmaceuticals, precision medicine, medical device innovation, and advanced manufacturing technologies.
• Collaboration: Encourages public-private partnerships between industry and academia.
• Intellectual Property Rights: Emphasis on securing patents and commercializing research outcomes.

4. Scheme for Development of Medical Device Parks

Objectives and Implementation

The scheme aims to establish four medical device parks to support domestic manufacturing and reduce import dependence. The parks provide state-of-the-art infrastructure and common facilities at a lower cost, fostering an ecosystem conducive to innovation and efficiency.

Key Features

• Financial Assistance: Up to INR 100 crore per park or 70% of the project cost.
• Selected States: Tamil Nadu, Kerala, Telangana, and Andhra Pradesh.
• Focus: Manufacturing a wide range of medical devices, from consumables to high-end diagnostic equipment.
• Common Facilities: Include testing labs, sterilization centers, and regulatory compliance support.

5. Atmanirbhar Bharat Abhiyan (Self-Reliant India Mission)

Objectives and Implementation

Launched in 2020 amid the COVID-19 pandemic, this mission aims to make India self-reliant by promoting domestic manufacturing and reducing import dependence across sectors, including pharmaceuticals.

Key Features

• Policy Measures: Reforms to ease business operations, financial incentives, infrastructure development, and encouraging FDI.
• Financial Package: INR 20 lakh crore (approx. USD 265 billion), with significant allocation for the pharma sector.
• Focus Areas: Enhancing manufacturing capabilities, attracting investments, fostering innovation, and improving supply chain resilience.

Overall Impact on the Pharmaceutical Industry

Export Growth and Global Ranking

• Consistent Upward Trend: India's pharmaceutical exports have consistently grown, reaching USD 25.4 billion in 2022.
• Global Market Share: India accounts for approximately 3.5% of the global pharmaceutical market by value.
• Generics Dominance: Supplies 20% of global generics and 62% of global vaccines.

Conclusion

The Government of India's strategic initiatives over the past decade have significantly transformed the pharmaceutical industry, enhancing its global competitiveness and positioning it as a key player in the international arena. The comprehensive schemes have addressed critical challenges, fostered innovation, and created a conducive environment for growth.

While challenges remain, the opportunities ahead are vast. With continued government support, industry commitment to innovation, and strategic investments, Indian pharmaceutical companies are well-positioned to become global leaders, contributing significantly to global health and economic prosperity.

References

1. Department of Pharmaceuticals, Government of India. Annual Reports and Schemes.
2. Export-Import Bank of India.
3. Pharmaceutical Export Promotion Council of India (Pharmexcil).
4. Press Information Bureau.
5. Indian Brand Equity Foundation (IBEF). Pharmaceutical Industry Reports.
6. World Health Organization (WHO).
7. McKinsey & Company. India Pharma 2020: Propelling Access and Acceptance, Realizing True Potential.
8. Frost & Sullivan. Indian Pharmaceutical Industry Analysis.
9. PricewaterhouseCoopers (PwC). Pharma 2020: Challenging Business Models.
10. International Trade Centre (ITC). Export Potential Map - India.
11. Ministry of Finance, Government of India.
12. Aurobindo Pharma Ltd.. Annual Reports.
13. NITI Aayog.

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official position of any affiliated organization.