Production Linked Incentive (PLI) Scheme approved for Bulk drugs

In the Indian Union Budget for year 2021-22, INR 5,440 crores have been approved for PLI Scheme for the pharmaceutical sector which deals with preparation, use and sale of medicines.

A pharmaceutical company does a lot of research and testing, which usually takes many years (12 to 20) and spends huge amount of money (millions of dollars) to create just one new drug or medicine for a disease or medical problem. Drugs created in this way are called Brand drugs.

They are very expensive because the company which created it wants to profit from its sale and usually sells the drugs at a premium (higher) price. New brand drugs are usually protected by patents, which are government issued rights that do not allow other companies from making the same drug and selling it in the market for a period of 20 years. This helps the company which did all the hard work of finding the novel drug get the benefit from selling it alone or exclusively in the market. But when this period of exclusivity ends, other companies are free to make the drugs and benefit from selling the same. These drugs made by other companies that work exactly like the brand drug are called generic drugs. (Below: Example of Lipitor, a brand drug developed by Pfizer, to treat Dyslipidemia, later produced generically by India’s Ranbaxy, after the patent on it expired.)

Indian Pharmaceutical Sector:

US holds the most patents for brand medicines. But India is the leader in the generic drug market. Generic drugs make up to 71% of the Indian pharmaceutical industry. This makes India, the largest supplier of generic drugs globally earning the nickname “the world’s pharmacy”. Generic drugs are in high demand because, they are cheaper than the brand drugs and exporting them brings in a lot of revenue for the country.

Critical Bulk Drugs:

In order to chemically synthesize these generic drugs, the company needs a lot of basic raw materials known as critical Bulk Drugs. However, India does not manufacture most of these Bulk Drugs and is significantly dependent on importing them from other countries. Government has approved PLI Scheme for setting up the chemical plants for producing these critical Bulk Drugs.

The PLI scheme will help to provide incentives (rewards) on sales of products manufactured with in the country without depending on imports from foreign countries. This scheme not only aims to cut down the cost but also make India self-reliant.