Indian government expedites approval process to promote pharma innovation
An objective to attain self-reliance and reduce import dependence in India’s pharmaceutical sector has resulted in the India government clearing 19 applications in a rapid-fire way with a committed investment of $628.84 million under its ambitious production linked incentive (PLI) scheme for the promotion of domestic manufacturing of critical key drug intermediates and active pharmaceutical ingredients (APIs), reports The Pharma Letter’s India correspondent. Incentives worth $944 million are to be given over nine years beginning with the current financial year. The government approved 14 projects belonging to two different categories for manufacturing APIs. As India’s Department of Pharmaceuticals launched the PLI scheme on February 24, that encourages setting up greenfield plants with minimum domestic value addition in four different target segments – two in fermentation based with at least 90% and two in chemical synthesis based with minimum 70% – the government has already cleared five applications under Target Segment I which involves a committed investment of $511.58 million. The outlay of the PLI-2 scheme is packed with incentives worth $2.07 billion to be disbursed during 2020-21 to 2029-30. Category 1 comprises biopharmaceuticals; complex generic drugs; patented drugs or drugs nearing patent expiry; cell based or gene therapy drugs; orphan drugs; complex excipients and phyto-pharmaceuticals. Under Target Segment II which focuses on fermentation-based niche KSMs (key starting materials)/drug intermediates/APIs), the government has cleared eight applications, including those from Natural Biogenex, Symbiotec Pharmalab, Macleods Pharmaceutical, Sudarshan Pharma Industries and Optimus Drugs. Under Target Segment III, which focuses on chemical synthesis based KSMs (key starting materials)/drug intermediates, the government has cleared six applications, including those from Saraca Laboratories, Emmennar Pharma, Hindys Lab, AartiSpeciality Chemicals, Meghmani and that of Sadhana Nitro Chem. Category 3 comprises repurposed drugs; auto immune drugs, anti-cancer drugs, anti-diabetic drugs, anti-infective drugs, cardiovascular drugs, psychotropic drugs and anti-retroviral drugs. With this, a total of 19 applications have been approved by the government.
Seeking global engagement
Communications and IT Minister Ravi Shankar Prasad said the focus of the scheme is to get global champions to India and to make national champions out of local manufacturers. The PLI scheme will incentivize the global and domestic players to engage in high value production, he added. The rate of incentive will be 10% (of incremental sales value) for Category 1 and Category 2 products for the first four years, 8% for the fifth year and 6% for the sixth year of production under the scheme. Major investments by global private equity giants such as Advent, Carlyle and KKR in India’s contract manufacturing organization sector, amid the pandemic, had reflected the solid prospects for growth in the country’s complex generics and bulk drug manufacturers. Analysts have pointed out that the increasing focus on the pharma manufacturing sector, both due to the pandemic and a renewed focus on ‘Make in India,’has got the government rushing in to fulfil its obligation by overhauling its pharma regulatory norms and expediting approval process to promote innovation. Given that India is now focused on developing novel therapies and vaccines on account of the COVID-19 situation, the move is expected to not only remove unnecessary procedural roadblocks but also foster innovation and help attract larger structured investments. Noting that the Indian pharma industry has grown at a compound annual growth rate (CAGR) of more than 11% in the domestic market and more than 16% in exports over the last two decades, a report by EY notes that the overall growth has been driven by the industry’s leadership in supplying generic formulations to markets across the globe. In the 2020-2030 period, it is envisaged that the Indian pharma industry will grow at a CAGR of more than 12% to reach $130 billion by 2030 from $41.7 billion in 2020.
The scheme has been hailed by industry experts, many of whom have termed it a welcome change from the earlier PLI scheme, and because 35%-40% of existing brownfield API units capacity need to be utilized.
Some 20 molecules can be manufactured by synthetic chemistry within a period of two to three months, state experts. This can be done considering the fact that the earlier PLI scheme announced in July 2020 is expected to take a minimum of two years to become fruitful. Fermentation based units alone will take three-four years as setting up of greenfield units generally entails a time of two years.
To ensure effective participation of the industry, the Department of Pharmaceuticals introduced some revisions to the PLI-1 scheme. by removing the minimum investment criteria and incorporating export and sale-based production criteria following an appeal by drug industries. As per the revised guidelines of PLI-1 scheme for boosting indigenous production of 41 products which cover all the identified 53 APIs for which India is critically dependent on China, the criteria of ‘minimum threshold’ investment have been replaced by ‘committed investment’ by the selected applicant. The change has been made to encourage efficient use of productive capital as the amount of investment required to achieve a particular level of production depends upon choice of technology. The provision which restricts the sales of eligible products to domestic sales only for the purpose of eligibility to receive incentives has been deleted, bringing the scheme in line with other PLI schemes and encouraging market diversification. A change has also been made in the minimum annual production capacity for 10 products – tetracycline, neomycin, para–amino phenol (PAP), meropenem, artesunate, losartan, telmisartan, acyclovir, ciprofloxacin and aspirin. Nithya Balasubramanian, director, Sanford Bernstein, stated the PLI scheme is expected to be a kicker to the API industry. Stating that the biggest challenge for Indian companies has been their ability to match the scale that Chinese companies have built over the last several years, the official said, the PLI scheme could level the playing field. Experts note the scheme is set to ensure a shift to India from China as the main source of API supply. In most products, there is a 15%-20% price difference between Chinese API and India APIs. The incentives will reduce that differential, they point out.
Source – thepharmaletter