During the last few decades, India’s Pharmaceutical industry has gone from strength to strength to acquire the epithet of “Pharmacy to the world”. The term rightfully depicts the country’s technical prowess and possession of a mature ecosystem with complete backward & forward integration. India’s large-scale manufacturing facilities have leveraged the talented work pool present in the country to build and scale a strong network of Pharma companies, which compete on global scale and have certifications such as USFDA, EUGMP from international authorities.
India’s Pharmaceutical industry ranks 3rd worldwide by volume and 14th by value. India is the largest provider of generic medicines globally, occupying a 20% share in global supply by volume, and also supplies 62% of global demand for vaccines. India has the largest number of US-FDA compliant Pharma plants (more than 262 including APIs) outside of USA. India has more than 2000 WHO-GMP approved Pharma Plants, 253 European Directorate of Quality Medicines (EDQM) approved plants with modern state of the art technology. The current market size of India’s Pharmaceutical Industry is around USD 41 Bn and is expected to grow to USD 100 Bn by FY 2025 at an unmatched CAGR of 20%. Indian Pharmaceuticals exports were valued worth USD 19.3 Bn in FY 2019, witnessing a strong year on year growth of 10.72%. India contributes about 20% to overall global Pharma Trade.
COVID-19 caused disruption to all industries in general and such was the case with the Indian Pharmaceutical industry which faced disruption in the supply chain and an exacerbated cost for KSMs/APIs & DIs imports. Over the last decade, India has become heavily dependent on the imports of Active Pharmaceutical Ingredients (APIs), Key Starting Material (KSMs) and Intermediates, majorly imported from China. The dependency on the imports from China is 60-70% in some of the critical intermediates and APIs such as penicillin, cephalosporins and macrolides. So, there is an urgent need for the Indian Pharmaceutical industry to execute backward and forward integration and to diversify their supply chain as disruptions similar to the Covid-19 crisis will have severe consequences for the local manufacturers and for the drug security of the country. China has achieved its numero uno position during the last decade (2001-2010) because of the work started way back in late 90s. This phenomenal feat is mainly attributed to the China’s extensive efforts towards developing economies of scale, easing regulations for bulk drug manufacturers, availability of low-cost utilities, building process efficiencies and supporting manufacturers in the form of subsidies, low taxes and fiscal incentives. The Indian Pharma industry has always been under pressure because of issues like pricing regulations, stricter implementation of pollution control norms, higher manufacturing costs, lack of financial incentives like lower tax, cheaper utilities, land subsidy and lack of large-scale mega parks with shared infrastructure for manufacturers.
To address the bottlenecks faced by the Indian Pharmaceutical Industry and to provide impetus to the sector, Department of Pharmaceuticals, Government of India came out with schemes namely “Production Linked Incentive” (PLI) and “Promotion of Bulk Drug Parks”. Under the PLI scheme, financial incentives will be given based on the committed investment and sales by the selected industries on eligible products. The eligible products in the scheme are fermentation and chemical synthesis based, which are critical and currently being imported in large quantities from other countries. PLI scheme will enable the Pharmaceutical industry to expand horizontally and help the nation become self-reliant in the long run. PLI scheme has a financial outlay of around INR 6940 Cr. Under the Bulk Drug Parks Scheme, 3 Bulk Drug Parks in the country will be given approval and a sum of max INR 1000 Cr each for the common infrastructure facilities inside the Bulk Drug park. The Bulk Drug Park will be a shot in the arm for budding and established Pharma industries who wants to scale up but want to focus only on their core competencies of manufacturing Pharma goods instead of worrying about utilities and other allied services.
The State of Punjab has a strong presence of complete value chain in Pharmaceutical Sector, having an annual turnover of around USD 1.2 Bn (2019-2020). 60+ Bulk Drugs/API companies such as IOL Chemicals & Pharmaceuticals, Centrient Pharmaceuticals, Saurav Chemicals and Ind-Swift are present in the State along with 90+ Formulations companies such as Sun Pharma, Nectar Lifesciences, Abryl Laboratories and Torque. The strong ecosystem of Pharmaceutical sector in the state, vicinity to the Baddi Pharma Cluster, and State’s strategic location catering to India’s 25% consumer base are the factors which make Punjab the ideal investment destination for pharma companies. Competitive and lucrative factors of production provide a compelling case for Pharmaceutical industries to invest in and expand their operations in the State. The strengthened ecosystem has also shown its mettle in the exports sphere. Punjab exported USD 130 Mn of Pharmaceuticals good in FY 2019 to USA, Canada, UK and South Africa amongst others. Export to countries having stringent regulations is a testament of the quality of pharma manufacturing present in the State. State based IOL Chemicals & Pharmaceuticals is the largest manufacturer & exporter of Ibuprofen, a nonsteroidal anti-inflammatory drug (NSAID), in the world.
The changing dynamics of the Pharmaceuticals sector deem manufacturers to innovate regularly and thus a considerable amount of revenue needs to be spent on Research and Development. Renowned institutes such as National Institute of Pharmaceutical Education & Research (NIPER), Institute of Microbial Technology (CSIR-IMTECH), Institute of Nano Science & Technology (INST) provide a favorable ecosystem and benefit to the industries in term of Research & Development. “Institutes of National Importance”, AIIMS & PGIMER provide educational, medical research, and training facilities and are a vital factor for sustenance and operation of the Pharmaceutical units in the State.
To provide impetus and to enhance the global competitiveness of the sector, the Govt. of Punjab has come out with several supportive measures. The Industrial and Business Development Policy 2017 accords Pharma Sector as a Thrust Sector accruing lucrative incentives such as Net GST reimbursement, Employment subsidy with no domicile restrictions etc. Further, in order to strengthen the ancillary units & boost Ease of Doing Business, the state has come up with holistic development policies & benefits such as Right to Business Act 2020 and special incentives for technological upgradation, enhancing market outreach etc.
On the Plug and Play infrastructure front, a factor that is vital for the operations and scalability of the Pharmaceuticals units, Government of Punjab is coming up with a Bulk Drug Park at Bathinda (1320 acres) proposed under the “Promotion of Bulk Drug Parks” Scheme of GoI & Integrated Pharma Park at Sri Fatehgarh Sahib (130 acres). These industrial parks will be equipped with State-of-the-art common infrastructure such as Effluent Treatment Plants (ETPs), testing facilities, captive power plants, boilers, chilled water plants, cooling towers etc. and will provide excellent connectivity to domestic and international markets. The Industrial Parks will be a boon for Pharmaceuticals units (APIs and Formulations) reducing the bottom line and enhancing the top line as industries will concentrate more on their core competencies. The Plug and Play infrastructure along with Production Linked Incentive Scheme (PLI) will help the industries to backward and forward integrate to increase their margin and profitability.
To take a great leap towards building self-reliance in the Pharmaceutical industry in the country and ensuring the drug security of the country, Government and Industry are working in tandem and fruits are to reaped in near future.
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