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Ramesh Shankar
Wednesday, December 21, 2022, 08:00 Hrs  [IST]

Recently, there were reports that the Union Health Ministry will soon come out with a Research-Linked Incentive (RLI) scheme for the pharmaceutical industry on the lines of Production Linked Incentive (PLI) scheme which the Department of Pharmaceuticals (DoP) had earlier launched to make the country self-reliant in active pharmaceutical ingredients (APIs) and drug intermediates. Under the PLI scheme, the DoP had announced three schemes which are Scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates and APIs in India with a financial outlay of Rs. 6,490 crore; Scheme for Pharmaceuticals with a financial outlay of Rs. 15,000 crore; and the Scheme for Promotion of Bulk Drug Parks with a financial outlay of Rs. 3,000 crore. The major aim of the PLI scheme is to create an environment that is favourable for domestic API manufacturers. The scheme provides an incentive on the basis of the sale by selected manufacturers who cover all 53 pre-mentioned categories of API. Now, active discussions are going on between the key stakeholders of the pharma industry and the government, and a comprehensive plan for the RLI scheme is in the works. If published reports are to be believed, only the companies earmarking up to 15 per cent from their turnover towards Research & Development (R&D) would be eligible for RLI incentives. Currently holding a 3.4 per cent market share worldwide, the Indian pharmaceutical business is ranked 14th in terms of value on the global chart. Domestic drug industry is expected to grow almost three times to about USD 130 billion by 2030. For this, the industry needs to focus on R&D activities. Traditionally, R&D for new drug development took a backseat in the country as most of the players refrained from taking a plunge in this high-risk, high-stakes gamble. And those few who ventured into the arena, restricted their activities, largely to preclinical or early-phase clinical studies.

Given this background, it is sure the RLI scheme will help raise India's position in the global pharmaceutical industry on the innovation index. The pharmaceutical sector spends approximately five to six per cent of its revenue on R&D which should increase to at least 15 per cent. The RLI scheme is expected to raise contribution to R&D and move up the value chain of innovation. The RLI scheme will encourage more and more players to have a tryst with new drug discovery research. Of course, these incentive schemes are testimony to the effort of the government as it plans India's transition from a low-value, high-volume player to a high-value, high-volume player in the global pharmaceutical market. There can be no two opinions about the fact that there is dire need to incentivise research in the pharmaceutical sector. Time is now ripe for the government to work on ways to boost the R&D ecosystem and promote greater industry-academic partnerships. There is need to promote innovation, global partnerships, and knowledge sharing amongst the country’s scientific community. Moreover, there is need to undertake research in emerging areas such as complex generics, biosimilars and orphan drugs.  So, the government should not further waste time and come out with the RLI scheme for the pharmaceutical industry on the lines of PLI scheme to boost the R&D ecosystem in the country.


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