To counter COVID-19, the government on March 21 announced a Rs 14,000 crore package that would incentivise production of active pharmaceutical ingredient (API) and medical devices in the country.
A pandemic later, India is finally waking to the inadequacies of the domestic healthcare system which has been relying on its foreign counterparts for not just the most basic medical devices (thermometers, BP monitors, stethoscopes, pulse-oximeters) but also critical antibiotics like penicillin and vitamins.
In FY19, India imported about $4.5 billion worth of drug raw materials from China. This equates to about 70-80 percent of our requirement. It also imported almost $6 billion worth of medical devices, which translates to about 80-90 percent of India's needs.
The approved scheme will promote bulk drug parks for financing common infrastructure facilities like common effluent treatment plant (CETP), quality assurance labs, pollution control facilities and skill development centres in 3 Bulk Drug Parks with the financial investment of Rs 3,000 crore in the next five years; and secondly will create a production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of critical key starting materials (KSMs), drug intermediates and active pharmaceutical ingredients (APIs) in the country with financial implications of Rs 6,940 crore for the next eight years.
For medical devices scheme include Rs 400 crore funding towards setting up common infrastructure facilities in four Medical Device Parks. The government also announced Rs 3,420 crore Production Linked Incentive (PLI) for promoting domestic manufacturing of medical devices.
We can't expect things to change suddenly on the ground, but it put us on a good footing. Giving boost to local manufacturing helps reduce our dependence on imports, save valuable foreign exchange and more importantly help in creating jobs.
The financial incentives should be backed by easing of approvals. A top executive of a bulk drug company said that it takes five years to get an approval to set up a bulk drug unit. Utilities like cheap power, water and access to are other requirements.
Industry often complains that the single window clearances by states often opens up multiple windows. Big companies get the red carpet, but smaller and midsize ones often face the brunt of government red tape in getting approvals.
Industry welcomes the move
The industry has praised the government's announcement.
“India has the capability and competence to manufacture all APIs. The announcement by the government will help revive the API industry in the country and will help the sector regain the dominance that was lost over the years. The investment in creating bulk drug parks is an important step in the right direction for the development of the industry” said Satish Reddy, IPA President and Chairman, Dr Reddy’s Laboratories.
“China has gained importance in fermentation-based APIs namely, antibiotics and vitamins. The government policy to encourage fermentation-based industry will help build self-reliance”, said Pankaj Patel, Chairman, Zydus Cadila.
Dilip Shanghvi, Managing Director, Sun Pharma said, “The new policy is a bold announcement by the government and will give the necessary fillip to the API industry in India. I would like to congratulate the government as this will safeguard healthcare security and create an ecosystem for strong Indian API industry.”
The Association of Indian Medical Device Industry (AiMeD), the domestic industry lobby welcomed the government announcement.
"A visionary move by the government will help address Indian National Healthcare security concerns – the inadequacy of which is being exposed in ongoing crisis to address the Coronavirus pandemic preparedness," Rajiv Nath, Forum Coorindator of AiMeD said.