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Govt plans bulk drugs parks, import curbs to boost manufacturing in India

Livemint:  August 21, 2017

New Delhi: In a bid to revive India’s active pharmaceutical ingredient (API) and bulk drug market, the government is contemplating restrictions on the import of APIs and has suggested setting up of mega bulk drug parks, a move that is expected to boost domestic production.

In the draft pharmaceutical policy framed by the department of pharmaceuticals under the ministry of chemicals and fertilizers, the centre has proposed “peak customs duty” for all APIs that can be indigenously manufactured.

Bulk drugs or APIs are the active raw materials used in a drug that give it the therapeutic effect. “All APIs which can be indigenously manufactured should be imported at peak customs duty,” said the draft policy, reviewed by Mint.

The government has also proposed that formulations produced from indigenous API and its intermediates (the raw material for manufacturing API) be given preference in government procurements. The move gains significance given India’s dependence on China for bulk drugs. More than 75% of India’s bulk drug imports come from China, according to the department of pharmaceuticals. “It has a direct bearing on the drug security of the nation as a whole,” said the draft.

Ramesh Adige, a former executive director of Ranbaxy Laboratories Ltd, said urgent policy interventions are needed. “The requirement of bulk drugs for the Indian pharmaceutical industry was till recently met by API manufacturing in India. But then, China emerged as the dominant player in the global API industry due to its large-scale manufacturing capabilities of APIs and intermediates,” he said. “This subject has been under discussion at the highest levels in the government for last five years now. This is considered to be a national security issue and we should not delay taking action any further.”

To reduce dependence on imports, the government has also suggested monetary incentives for companies, recommending that formulations produced from indigenously produced APIs be taken out of price control for five years. The “price benefit”, according to experts, will trigger fresh investments. “Low margin in API business is one of the major reasons for Indian companies to shift their focus. Each of the companies have gradually shifted from API to formulations. By keeping the formulations produced from indigenously produced API out of price control, the domestic manufacturers will be protected as they will get a price benefit,” said an expert who was part of V.M. Katoch committee formed by the centre to formulate a long-term policy and strategy for promoting domestic manufacture of APIs/bulk drugs in India.

Additionally, the government has proposed setting up dedicated parks in the country where special priority will be given to bulk drugs makers. Pharmaceutical firms currently needs a lot of clearances to set up a manufacturing plant. To simplify the process, the draft policy suggests providing adequate logistics and timely clearances to set up plants. “Mega parks should provide for clearances for plants with minimum interface/single window clearance of various agencies by placing an official of the concerned department including the department of environment within the mega park itself. The state government would be encouraged to set up these parks in a public-private partnership mode,” it further said.

According to the department of pharmaceuticals, more than 60% of APIs are sourced from other nations; for some specific APIs, the dependence is over 80-90%. “Our competitiveness and capability in manufacturing some of APIs has also dwindled. The new pharmaceutical policy therefore needs to address the way and means to restore and revive the API,” the draft said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.