1-Sep-2022: Centre Grants ‘in-Principle’ Approval of three Bulk Drug Parks to Himachal Pradesh, Gujarat and Andhra Pradesh

The Department of Pharmaceuticals has conveyed ‘in-principle’ approval to the proposals of the three States Viz, Himachal Pradesh, Gujarat and Andhra Pradesh under the Scheme for “Promotion of Bulk Drug Parks”, a key initiative to support the Bulk Drugs manufacturing in the country.  The Scheme, with a financial outlay of Rs. 3,000 crores notified in 2020, provides for financial assistance to three States for establishing Bulk Drug Parks and aims to bring down the cost of manufacturing of bulk drugs by creation of world class common infrastructure facilities supported by the Central Government and thereby increase the competitiveness of the domestic bulk drug industry.

The Indian Pharmaceutical industry is the 3rd largest in the world by volume. India exported pharmaceuticals worth Rs. 1,75,040 crore in the financial year 2021-22, including Bulk Drugs/ Drug Intermediates.  Also, India is one of the major producers of Active Pharma Ingredients (API) or bulk drugs in the world. India exported Bulk Drugs/ Drug Intermediates worth Rs. 33,320 crore in financial year 2021-22.

However, the country also imports various Bulk Drugs/ APIs for producing medicines from various countries. Most of the imports of the Bulk Drug/APIs being done in the country are because of economic considerations.

The Government strives to minimize country’s dependence on imports and to give fillip to indigenous manufacturing. In order to make the country self-reliant in APIs and drug intermediates, the Department of Pharmaceuticals is implementing various schemes and one of the key interventions is the Scheme for Bulk Drug Parks.

The Bulk Drug Parks to be developed under the scheme will provide common infrastructure facilities at one place thereby creating a robust ecosystem for the Bulk Drug manufacturing in the country and also reducing the manufacturing cost significantly. This scheme is expected to encourage domestic manufacturing of bulk drugs to reduce import dependence and to establish a dominant position in the global market by providing easy access to standard testing & infrastructure facilities. This scheme will also help industry meet the standards of environment at a reduced cost through innovative methods of common waste management system and also to exploit the benefits arising due to optimization of resources and economies of scale.

Under the scheme, proposals were received from 13 States. The Department was guided by an Advisory Committee under CEO, NITI Aayog in the appraisal of the proposals, based on the quantitative as well as qualitative methodology.

The financial assistance to the proposed Bulk Drug Park in Gujarat and Andhra Pradesh would be 70% of the project cost of common infrastructure facilities. In case of Himachal Pradesh, being Hilly States, financial assistance would be 90% of the project cost. Maximum assistance under the scheme for one Bulk Drug Park would be limited to Rs. 1000 crores.

As per the proposals submitted by these States, the Bulk Drugs will be established in 1402.44 acres of land at Tehsil Haroli, District Una, Himachal Pradesh, 2015.02 acres of land at Tehsil Jambusar, District Bharuch, Gujarat and 2000.45 acres of land at K.P. Puram & Kodhada of Thondagi Mandal of East Godavari District, Andhra Pradesh. These three States were instructed to submit their Detailed Project Reports in next 90 days, to appraise the same and to process for issuance of final approval under the scheme.

The scheme reflects the spirit of co-operative federalism where the Central Government and State Governments will partner to develop the Bulk Drug parks for better performance of the sector.

Other interventions of the Department, in ensuring domestic manufacturing of the Bulk Drugs, include,

• Production Linked Incentive (PLI) Scheme for domestic manufacturing of KSMs/ Drug Intermediates (DIs) and APIs. Under this scheme, a total of 51 projects have been approved, out of which, 14 projects have already commissioned and started manufacturing of the drugs.
• PLI for Pharmaceuticals, provides for financial incentive to 55 selected applicants for manufacturing of identified products under three categories and eligible drugs under this scheme include APIs.

26-Jul-2022: Bulk Drug Park in the country

Department of Pharmaceuticals implements the Scheme for Promotion of Bulk Drug Parks to facilitate setting up of Three (3) Bulk Drug Parks in the country with the objective to bring down the cost of manufacturing of bulk drugs by creation of world class common infrastructure facilities.

The financial assistance by the centre is subject to a maximum limit of Rs.1000 Crore per park or 70% of the project cost of CIF ( 90% in case of North Eastern States and Hilly States i.e. Himachal Pradesh, Uttarakhand, UT of Jammu & Kashmir and UT of Ladakh), whichever is less. The total financial outlay of the scheme is Rs. 3000 crore and the tenure of the Scheme is from 2020-21 to 2024-25. The proposals received from the States under the scheme are under evaluation.

Under the scheme, financial assistance would be provided for creation of Common Infrastructure Facilities (CIF) like (i) Central Effluent Treatment Plant(s) (CETP) (ii) Solid waste management (iii) Storm water drains network (iv) Common Solvent Storage System, Solvent recovery and distillation plant (v) Common Warehouse (vi) Dedicated power sub-station and distribution system with the necessary transformers at factory gate (vii) Raw, Potable and Demineralized Water (viii) Steam generation and distribution system (ix) Common cooling system and distribution network (x) Common logistics (xi) Advanced laboratory testing Centre, suitable for even complex testing/ research needs of APIs, including microbiology laboratory and stability chambers (xii) Emergency Response Centre (xiii) Safety/ Hazardous operations audits centre and (xiv) Centre of Excellence etc. in any upcoming Bulk Drug Park promoted by State Government/State Corporation.

The common infrastructure facilities created under the scheme will help reduce the manufacturing cost of bulk drugs and also enhance the competitiveness of the domestic industry.

27-Jul-2020: Shri Sadananda Gowda launches Schemes and announces guidelines paving way for setting up of Bulk Drugs Parks & Medical Devices Parks in the country

Union Minister for Chemicals and Fertilizers Shri DV Sadananda Gowda launched here today four schemes of  Department of Pharmaceuticals for promotion of domestic manufacturing of bulk drugs and medical devices parks in the country . On this occasion MoS(i/c) for Shipping and MoS for Chemicals & Fertilizers, Shri Amitabh Kant, CEO NITI Aayog, Dr P D Waghela, Secretary, Dept. of Pharmaceuticals were also present.

Speaking on the occasion, Shri Gowda said that this in line with the vision of Prime Minister Shri Narendra Modi, and his clarion call for making India Aatma Nirbhar in pharma sector. For this the Government of India has approved four schemes, two each for Bulk Drugs and Medical Devices parks. He exhorted the industry and the States to come forward and participate in these schemes.

He said , India is often referred to as ‘the pharmacy of the world’ and this has been proved true especially in the ongoing Covid-19 pandemic when India continued to export critical lifesaving medicines to needy countries even during the countrywide lockdown. However, despite these achievements, it is a matter of concern that our country is critically dependent on imports for basic raw materials, viz. Bulk Drugs (Key Starting Materials (KSMs)/ Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs)) that are used to produce some of the essential medicines. Similarly in medical devices sector, our country is dependent on imports for 86% of its requirements of medical devices.

Shri Mandaviya said that this is a very important initiative towards further developing Indian pharmaceutical capacities. Giving details of the Guidelines  Shri  Mandaviya  said that the Production Linked Incentive (PLI) schemes for promoting domestic manufacturing of KSMs, DIs and APIs and medical devices will go a long way including to boost domestic manufacturing of 53 bulk drugs, on which India is critically dependent on imports.

 The list of 41 products contained in the scheme guidelines will enable domestic production of 53 bulk drugs. Financial incentives will be given to a maximum of 136 manufacturers selected under the scheme as a fixed percentage of their domestic sales of these 41 products manufactured locally with required level of domestic value addition.

 The incentives would be subject to annual ceilings communicated in the approval letter. The incentives would be given for a period of 6 years. In case of fermentation based products, the rate of incentive is 20% for first four years, 15% for the fifth year and 5% for the sixth year.

 In case of chemically synthesised products, rate of incentive is 10% for all six years. The selected manufacturers shall have to complete committed investment above a threshold investment mandated for each product and achieve a prescribed minimum installed capacity before they are eligible to receive incentives. Threshold investment is Rs 400 crore for four fermentation based products and Rs 50 crore for ten fermentation based products. Similarly, threshold investment is Rs 50 crore for four chemically synthesised products, and Rs 20 crore for 23 chemically synthesised products. Minimum installed capacity to be achieved for each of the 41 products is prescribed in the guidelines. The incentives for fermentation based products would be available from FY 2023-24 i.e. after a two year gestation period during which the selected applicant has to complete the committed investment and install the committed capacity.

For chemically synthesised products the incentives would be available from FY 2022-23 i.e. after a gestation period of one year during which the selected applicant has to make the committed investment and install the committed capacity. Any company, partnership firm, proprietorship firm or a LLP registered in India and possessing a minimum net worth (including group companies) of 30% of proposed investment is eligible to apply for incentives under the scheme. An applicant can apply for any number of products.

The applicants will be selected on the basis of a transparent composite evaluation criteria which include the annual production capacity committed by the applicant and the sale price of the product quoted by the applicant. Applicants quoting low sale price and higher production capacity will get higher marks in the evaluation.

The guidelines are available on the website of the Department of Pharmaceuticals. The salient features of the four schemes are:

The scheme is open for applications for a period of120 days from the date of issuance of guidelines and the approval will be given to the selected applicants within 90 days from the closure of application window. Applications will be received only through an online portal. The total financial outlay of the scheme is Rs. 6,940 crore.

Scheme for promotion of Bulk Drug Parks: The scheme envisages creation of 3 bulk drug parks in the country. The grant-in-aid will be 90% of the project cost in case of North-East and hilly States and 70% in case of other States. Maximum grant-in-aid for one bulk drug park is limited to Rs.1000 crore.

States will be selected through a challenge method. The States interested in setting up the parks will have to ensure assured 24*7 supply of electricity and water to the bulk drug units located in the park and offer competitive land lease rates to bulk drug units in the park. The location of proposed park from environmental angle and logistics angle would be taken into account while selecting the States.

The ease of doing business ranking of the state, incentive policies of the State applicable to bulk drug industry, availability of technical manpower in the state, availability of pharmaceutical/chemical clusters in the state will also be factored in while selecting the States. The interested States will be scored and ranked on an evaluation criteria, given in the guidelines, which captures above parameters. The States getting top 3 ranks will be selected. The States have to submit their proposal within 60 days of the date of issuance of the guidelines. Selection will be done and in-principle approval will be given to three selected States within 30 days of last date of submission of proposals.

 Thereafter, the 3 selected States will have to submit a Detailed Project Report (DPR) within 180 days of the in-principle approval based on which final approval will be given. The grant-in–aid will be released in four installments. First three installments will be 30% each and the last will be 10% of the grant-in-aid. The selected States will have to complete the parkas per the approved DPR within two years of date of release of first installment of grant-in-aid. It is envisaged to have a single window system in these parks for all regulatory approvals under one roof. The creation of a centre of excellence is also envisaged to enable an ecosystem for Research and Development. The total financial outlay of the scheme is Rs. 3,000 crore.

Production Linked Incentive (PLI) scheme for promoting domestic manufacturing of Medical Devices: The scheme intends to boost domestic manufacturing of medical devices in four target segments by giving financial incentives on sales to a maximum number of 28 selected applicants for a period of 5 years. Financial incentive will be given at a rate of 5% of the sales of domestically manufactured medical devices. The incentives would be subject to annual ceilings communicated in the approval letter the incentives would be available from FY 2021-22. Four target segments are:-

Cancer care / Radiotherapy medical devices

Radiology & Imaging medical devices (both ionizing & non-ionizing   radiation products) and Nuclear Imaging devices

Anesthetics& Cardio-Respiratory medical devices including catheters of Cardio Respiratory Category & Renal Care medical devices

AII Implants including implantable electronic devices

Any company registered in India and possessing a minimum net worth ( including group companies) of Rs.18 crore (30% of threshold investment of first year) is eligible to apply for incentives under the scheme. The applicant can apply for multiple products within one target segment as well as multiple target segments. The selected applicants shall have to complete a threshold investment prescribed for each year and achieve a minimum prescribed sale for that year for them to be eligible to receive incentives. The application window is 120 days from the date of issuance of guidelines and the approval thereafter to the selected applicants will be accorded within 60 days from the date of closure of application window. The applications will be received only through an online portal. The total financial outlay of the scheme is Rs.3,420 crore.

CEO.NITI Aayog, Shri Amitabh Kant said India Produces huge number of Generic medicines as well as more than 500 API, still it has to import large quantity of API .He said prime minister wants to reduce dependency on imports.

 Secretary pharmaceuticals Shri P D Vaghela gave a detailed presentation of the guidelines.

It is expected that these schemes will make India not only self-reliant but also capable of catering to the global demand for the selected bulk drugs and medical devices. This is a golden opportunity for the investors since incentivisation to industry and world-class infrastructure support simultaneously will help in bringing down the cost of production significantly. These schemes along with the liberal FDI policy in these sectors and an effective corporate tax rate of about 17% (including surcharge and cess) will give a competitive edge to India in the selected products vis-à-vis other economies.

21-Mar-2020: Cabinet approves Promotion of domestic manufacturing of critical Key Starting Materials/Drug Intermediates and Active Pharmaceutical Ingredients in the country

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved the following schemes:

1. The scheme on Promotion of Bulk Drug Parks for financing Common Infrastructure Facilities in 3 Bulk Drug Parks with financial implication of Rs. 3,000 crore for next five years.
2. Production Linked Incentive (PLI) Scheme for promotion of domestic manufacturing of critical KSMs/Drug Intermediates and APIs in the country with financial implications of Rs6,940 crore for next eight years.

Details:

Promotion of Bulk Drug Parks

1. Decision is to develop 3 mega Bulk Drug parks in India in partnership with States.
2. Government of India will give Grants-in-Aid to States with a maximum limit of Rs. 1000 Crore per Bulk Drug Park.
3. Parks will have common facilities such as solvent recovery plant, distillation plant, power & steam units, common effluent treatment plant etc.
4. A sum of Rs. 3,000 crore has been approved for this scheme for next 5 years.

Production Linked Incentive Scheme

1. Financial incentive will be given to eligible manufacturers of identified 53 critical bulk drugs on their incremental sales over the base year (2019-20) for a period of 6 years.
2. Out of 53 identified bulk drugs, 26 are fermentation based bulk drugs and 27 are chemical synthesis based bulk drugs.
3. Rate of incentive will be 20 % (of incremental sales value) for fermentation based bulk drugs and 10% for chemical synthesis based bulk drugs.
4. A sum of Rs. 6,940 crore has been approved for next 8 years.

Impact:

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

Production Linked Incentive Scheme:

1. The scheme intends to boost domestic manufacturing of critical KSMs/Drug Intermediates and APIs by attracting large investments in the sector to ensure their sustainable domestic supply and thereby reduce India's import dependence on other countries for critical KSMs/Drug Intermediates and APIs.
2. It will lead to expected incremental sales of Rs. 46,400 crore and significant additional employment generation over 8 years.

Implementation:

Promotion of Bulk Drug Parks: The scheme will be implemented by State Implementing Agencies (SIA) to be set up by the respective State Governments and the target is to set up 3 mega Bulk Drug Parks.

Production Linked Incentive Scheme: The scheme will be implemented through a Project Management Agency (PMA) to be nominated by the Department of Pharmaceuticals. The Scheme will be applicable only for manufacturing of 53 identified critical bulk drugs (KSMs/Drug Intermediates and APIs).

Benefits:

1. Common infrastructure facilities would be created with the financial assistance under the sub-scheme in 03 Bulk Drug Parks.
2. It is expected to reduce manufacturing cost and dependency on other countries of Bulk Drug in the country.

Background: The Indian pharmaceutical industry is the 3rd largest in the world by volume. However, despite this achievement, India is significantly dependent on import of basic raw materials, viz., Bulk Drugs that are used to produce medicines. In some specific bulk drugs the import dependence is 80 to 100%.

Continuous supply of drugs is necessary to ensure delivery of affordable healthcare to the citizens. Any disruption in supplies can have 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.