With an aim to reduce its import dependence on China for sourcing drug raw material and spur production in India, the government proposes to offer local manufacturers of active pharmaceutical ingredients (APIs) production and viability-linked incentives up to Rs 10 crore.
The detailed proposal — framed by a technical committee under the Department of Pharmaceuticals (DoP) — includes guidelines for the production-linked incentive scheme for local manufacturers of API, as well as that for promotion of bulk drug parks.
The government will provide Rs 10 crore each to domestic companies setting up plants to produce 41 products covering 53 crucial active pharmaceutical ingredients (APIs) for which the domestic drug industry is completely dependent on imports from China. Besides, it suggests distribution of an annual incentive of Rs 720 crore per annum to four fermentation products including penicillin G.
The incentive is part of a Rs 10,000-crore production-linked incentive scheme approved by the cabinet in March to speed up manufacturing of critical bulk drugs and APIs here. The incentive will be given to companies investing in greenfield plants to manufacture 53 crucial APIs of anti-TB drugs, steroids and vitamins.
The proposal says incentives will be given on condition that products must be manufactured with complete backward integration and supplied to domestic drug-makers only.
While drug-makers are required to apply for the incentive, the technical committee will review applications based on specific criteria such as scale of economies, cost of production of products, potential technological obsolescence, environmental burden to prevent the industry from falling sick post incentive period, the proposal said.
This assumes significance because price of API or bulk drug has been a crucial factor hindering local players to enter into manufacturing in India as API imported from China has been priced much cheaper than the domestically manufactured ones.
The idea behind the government’s incentive package is to support the local drug manufacturing industry to create capacities to be self-sufficient and secure backward integration starting from sourcing of key starting material to API to finished products.