The government has approved a package comprising four schemes with a total outlay of Rs 13,760 crore to boost the domestic production of bulk drugs and medical devices in the country and exports.

The Union Cabinet chaired by Prime Minister Narendra Modi has approved an outlay of  Rs 9,940 crore and Rs 3,820 crore for bulk drugs and medical devices, respectively, Minister of State for Chemicals and Fertilisers Mansukh Mandaviya said on March 21.

The Cabinet also approved a sum of Rs 3,000 crore for the next five years for the scheme on promotion of bulk drug parks for financing common infrastructure facilities in three bulk drug parks, he added.

A sum of Rs 6,940 crore has been approved for the Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs), drug intermediates and Active Pharmaceutical Ingredients (APIs) in the country, Mandaviya said.

The PLI scheme will lead to expected incremental sales of Rs 46,400 crore and significant additional employment generation over eight years, he added.

Bulk drugs

The Indian pharmaceutical industry is the third largest in the world by volume. However, despite this achievement, India is significantly dependent on import of basic raw materials — bulk drugs — that are used to produce medicines. 

In some specific bulk drugs, the import dependence is 80 to 100 per cent.

Continuous supply of drugs is necessary to ensure delivery of affordable healthcare to the citizens. 

Any disruption in supplies can have a significant adverse impact on drug security, which is also linked to the overall economy of the country. Self-sufficiency in manufacturing of bulk drugs is highly required.

The Union Cabinet approved a scheme for promotion of bulk drug parks with financial implication of Rs 3,000 crore for next five years.

It has been decided to develop three mega bulk drug parks in India in partnership with states. 

Centre will give grants-in-aid to states with a maximum limit of Rs 1000 crore per bulk drug park.

Parks will have common facilities such as solvent recovery plant, distillation plant, power and steam units, common effluent treatment plant, etc.

The scheme is expected to reduce manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs.

Promotion of medical device parks

Medical devices is a growing sector and its potential for growth is the highest among all sectors in the healthcare market. 

It is valued at Rs 50,026 crore for 2018-19 and is expected to reach Rs 86,840 crore by 2021-22. 

India depends on imports up to an extent of 85 per cent of total domestic demand of medical devices.

The medical device sector suffers from a cost of manufacturing disability of around 12 per cent to 15 per cent, on account of lack of adequate infrastructure, domestic supply chain and logistics, high cost of finance, inadequate availability of quality power, limited design capabilities and low focus on R&D and skill development, etc.

There a need for a mechanism to compensate for the manufacturing disability.

The Production Linked Incentive (PLI) scheme for promoting domestic manufacturing of medical devices with financial implications of Rs 3,420 crore.

The scheme aims to promote medical device parks in the country in partnership with the states.

A maximum grant-in-aid of Rs 100 crore per park will be provided to the states.

The scheme aims to boost domestic manufacturing by attracting large investments in the medical device sector. 

The scheme will be implemented by a state implementing agency. 

The scheme for promoting domestic manufacturing will be implemented by a Project Management Agency (PMA) to be nominated by the department of pharmaceuticals. 

The target for the PLI scheme is to provide assistance to about 25-30 manufacturers.

Benefits of the scheme

Common infrastructure facilities would be created in four medical device parks, which is expected to reduce manufacturing cost of medical devices in the country.

The PLI scheme for promoting domestic manufacturing of medical devices would boost domestic manufacturing and attract large investments in the medical device sector, particularly in the identified target segments. 

It will lead to expected incremental production of Rs 68,437 crore over a period of five years. 

The scheme will lead to generation of additional employment of 33,750 jobs over a period of five years.

The scheme will lead to substantial reduction in import of target segments of medical devices.

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