PLI scheme may trigger investments worth Rs 50,000 crore into pharma sector

Major pharma players have warmed up to the bulk drug production-linked incentive (PLI) scheme. According to industry insiders, once the second tranche of the scheme covering formulations comes online, it may trigger investments worth Rs 50,000 crore. 

There are two PLI schemes for the pharma sector — one for bulk drugs, and another covering formulations, biologics, complex generics, etc. 

According to the people, 86 companies have applied to start production of bulk drugs listed under the PLI scheme so far, said sources. “About 86 proposals have gone to the department of pharmaceuticals for 215 molecules in total,” said an industry source. 

Lupin, Cipla, and Dr Reddy’s Laboratories (DRL) are have shown interest in participating already. 

Some drug majors are looking for opportunities in the second version of the PLI scheme, which is about to come. Lupin, for example, has already applied under the bulk drug API scheme, and is looking to participate in the second round as well.

Nilesh Gupta, managing director of Lupin, said: “The existing PLI scheme and the second version of the PLI scheme are powerful. We are looking at opportunities in the second round. We are looking at some of the products that fits in with our business and our overall plans. We have put in applications in the first PLI scheme too, but we can participate more meaningfully in the second round.”

Cipla has also indicated that it will be interested in participating in the second phase of the PLI scheme. 

Last year, the government had announced a Rs 6,940-crore PLI scheme to boost local manufacturing of bulk drugs (raw materials to make medicines), as India imports almost 70 per cent of its requirement of bulk drugs.

Then, in November, the Cabinet approved of a Rs 15,000-crore scheme for pharma products. The incentive will be 5-10 per cent of the production value, sources said. It could also be linked to production volume. 

The idea is two-pronged — to reduce import of high-value products like patented drugs, cell-based or gene therapy products, etc, and to boost local manufacturing to a scale that India becomes a net exporter of these products. 

“A lot of patented products now get made in countries like Ireland. Our aim is to encourage production in India through incentive schemes to attract multinational corporations to make these drugs here and use India as the manufacturing base for exporting,” said a senior government official directly involved in the drafting of the scheme. 

The fine print of this second scheme is expected in February. A new committee has been formed by the department of pharma that is working out the modalities. 

A source said manufacturers would be categorised according to turnovers, and incentives would be different for different categories. 

Most players are upbeat about the second round as it has broader coverage — APIs, formulations, complex generics, biologics, orphan drugs, etc. 

B R Sikri, chairman of Federation of Pharma Entrepreneurs, felt the scheme would enable MSME players to come forward and about 80 per cent of the chemical synthesis products would now be made in India. “With the two schemes in place, there would be opportunities for both big pharma as well as the smaller players to invest into capacity building here,” he said.