Pharma stocks rally after cabinet approves PLI scheme

Shares of eight pharmaceutical companies rose by 0.5% to 3.4% after the cabinet approved Production Linked Incentive (PLI) scheme for pharmaceuticals segment.

Hikal (up 3.46%), Neuland Laboratories (up 3.08%), IPCA Laboratories (up 2.85%), Alkem Laboratories (up 1.43%), Torrent Pharmaceutical (up 1.09%), Biocon (up 0.6%), Cadila Healthcare (up 0.58%) and Aurobindo Pharma (up 0.52%) were top gainers in pharmaceutical space.

The Union Cabinet on Wednesday approved Production Linked Incentive (PLI) scheme for pharmaceuticals over a period of Financial Year 2020-21 to 2028-29.

The scheme will benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of wider range of affordable medicines for consumers. The scheme is also expected to bring in investment of Rs 15,000 crore in the pharmaceutical sector.

The scheme is expected to promote the production of high value products in the country and increase the value addition in exports. Total incremental sales of Rs 2,94,000 crore and total incremental exports of Rs 1,96,000 crore are estimated during six years from 2022-23 to 2027-28. The scheme is expected to generate employment for both skilled and un-skilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.

It is expected to promote innovation for development of complex and high-tech products including products of emerging therapies and in-vitro Diagnostic Devices as also self-reliance in important drugs. It is also expected to improve accessibility and affordability of medical products including orphan drugs to the Indian population.

The duration of the scheme will be from FY 2020-21 to FY 2028-29. This will include the period for processing of applications (FY 2020-21), optional gestation period of one year (FY 2021-22), incentive for 6 years and FY 2028-29 for disbursal of incentive for sales of FY 2027-28.

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