Pharma PLI scheme to reduce India’s dependence on API imports: Report

The agency believes the PLI scheme to be a positive step in reducing India's dependence on China, though the benefits of the scheme will be visible after five to seven years.

New Delhi: India’s production-linked incentive (PLI) scheme will reduce India’s dependence on imports for key active pharmaceutical ingredients (APIs) said India Ratings and Research (Ind-Ra).

Accordingly, the rating agency expects import dependency to reduce around 43 per cent in the medium term from around 70 per cent currently.

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“The scheme will not only attract foreign investments, but also promote the development of complex and high-tech products, emerging therapies and in-vitro diagnostic devices in India.”

“The benefits of the scheme will be a function of the pace of rollout of the scheme and interest of Indian pharmaceutical companies.”

The agency opined that the scheme will benefit API manufacturers by giving them extra push to setup the necessary infrastructure along with their pre-planned infrastructure.

“Whereas, the benefit to formulations manufacturers will be limited, because compared to the industry size, the incentives are unlikely to be strong enough for them to move up the value chain.”

“Bulk drug parks will help integrate infrastructure facilities, thereby reducing the manufacturing cost of APIs. Ind-Ra believes, if bulk drug parks are setup as envisaged to address infrastructure and approval issues, this will improve the ease of doing business.”

The agency believes the PLI scheme to be a positive step in reducing India’s dependence on China, though the benefits of the scheme will be visible after five to seven years.

“Repeated raw material supply disruptions from China has been a cause of concern for global pharma companies including India, due to their high dependency on China.”

“MNC companies have started looking for an alternative to keep their supplies going uninterrupted.”

According to the government estimates, the scheme is expected to bring in investment of Rs 150 billion in the domestic pharmaceutical sector.