Investment Opportunities in API Bulk Drugs & Intermediates Manufacturing Unit. Govt Announces Rs. 13,760-Cr Package to Boost API & Medical Device Production in India.
Active Pharmaceutical Ingredient (API)
API (Active Pharmaceutical Ingredient) means the active ingredient which is contained in medicine. For example, an active ingredient to relieve pain is included in a painkiller. This is called API. A small amount of the active ingredient has an effect, so only a tiny part of the active ingredient is contained in medicine.
Role of Government towards API
The coronavirus outbreak disrupting supply of active pharmaceutical ingredients (APIs) and medical devices from China to India, the government has come out with four schemes worth Rs 13,760 crore to encourage manufacturing of bulk drugs and medical devices in the country and their exports.
On March 21, the Union Cabinet under the chairmanship of Prime Minister Narendra Modi had approved an expenditure of Rs. 9,940 crore and Rs. 3,820 crore for APIs and medical devices, respectively.
The Cabinet also approved a scheme on promotion of bulk drug parks for financing common infrastructure facilities in three bulk drug parks with financial implication of Rs. 3,000 crore for next five years. The government will give grants-in-aid to states with a maximum limit of Rs. 1,000 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 government further approved production linked incentive (PLI) scheme for promotion of domestic manufacturing of critical KSMs/drug intermediates and APIs in the country with financial implications of Rs. 6,940 crore for next eight years.
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.
Out of 53 identified bulk drugs, 26 are fermentation based bulk drugs and 27 are chemical synthesis based bulk drugs.
Rate of incentive will be 20 per cent (of incremental sales value) for fermentation based bulk drugs and 10 per cent for chemical synthesis based bulk drugs.
Related Projects: - Pharmaceutical, Drugs, Fine Chemicals, Bulk Drug Intermediates,
The PLI scheme will lead to expected incremental sales of Rs. 46,400 crore and significant additional employment generation over eight years.
The drug industry has welcomed the incentives offered by the government to promote API units in India.
Besides APIs, the Cabinet also approved the scheme for promotion of 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. It will have financial implications of Rs. 400 crore.
The PLI scheme for promoting domestic manufacturing of medical devices will have financial implications of Rs. 3,420 crore for next five years.
Medical device 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 to 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.
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Union Cabinet scheme on Promotion of Bulk Drug Parks
• 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.
• 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.
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Promotion of Bulk Drug Parks
• Decision is to develop 3 mega Bulk Drug parks in India in partnership with States.
• Government of India 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 & steam units, common effluent treatment plant etc.
• A sum of Rs. 3,000 crore has been approved for this scheme for next 5 years.
Production Linked Incentive Scheme
• 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.
• Out of 53 identified bulk drugs, 26 are fermentation based bulk drugs and 27 are chemical synthesis based bulk drugs.
• Rate of incentive will be 20 % (of incremental sales value) for fermentation based bulk drugs and 10% for chemical synthesis based bulk drugs.
• A sum of Rs. 6,940 crore has been approved for next 8 years.
List of APIs Products Identified
3) Erythromycin Stearate/Estolate
8) Piperacillin Tazobactam
15) Vitamin B1
16) Vitamin B6
17) Clindamycin phosphate
18) Clindamycin HCL
23) Potassium clavulanate
42) Diclofenac Sodium
Market in India
The Indian pharmaceutical industry is ranked third in the world in terms of production volume and 13th in terms of domestic consumption value. The Indian pharmaceutical industry size is estimated at US$25 billion in 2015. Formulations account for 65% and bulk drugs for the balance 35% in value terms. The industry is expected to reach US$55 billion by 2020. Bulk drug exports are expected to grow the fastest at 14-16% CAGR due to the growing demand of generic products and rising cost pressures that innovators face. Formulation exports are also expected to grow at 14-16% CAGR.
API manufacturers in India are making efforts to strengthen their marketing capacity in the regulated markets by improving production yields, modifying production processes, and increasing sales in the international markets. More than 30% of the APIs manufactured in India are exported to countries such as US, UK, Japan, etc. The total production market of API in India was valued at approximately US$ 11 Billion in FY 2016. This market is forecasted to grow at a CAGR of around 9% during the period of FY 2016–FY 2022. Of the total domestic consumption, approximately 32% was imported. Of the total imports, China alone accounts for 57-60% of the APIs imported by India. The remaining imports are from countries such as Italy, Germany, Malaysia, and others. These facts indicate that there is plentiful scope for the domestic API market to grow, if the manufacturers are able to produce the required amount of APIs on their own, rather than importing it from other countries.
Indian API Domestic Consumption
The Indian API domestic consumption market will grow at a CAGR of around 10% from FY 2016 to FY 2022. Furthermore, the government is also taking various initiatives, such as allocating lands in various states for the development of API Mega Parks, increased investment in R&D, etc. to boost the industry. These initiatives will further propel the growth of the Indian API industry, as well as the domestic market for the APIs.
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Key players, such as Sun Pharma, Dr. Reddy’s, Cipla, Aurobindo Pharma, Lupin, etc., are being lured to increase their investment in the Indian API industry by providing them various lucrative offers.
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