Government of India promotes bulk drugs parks and curbs imports to boost manufacturing in India

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.

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, which has a direct bearing on the drug security of the nation as a whole.

Urgent policy interventions were needed as 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. This
subject had been under discussion at the highest levels in the government for last five years, as it was a
national security issue and any delay in taking action would have been detrimental.

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 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.

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 would provide minimum interface clearances for plants/single
window clearance of various agencies by placing an official of the concerned department including the
Department of Environment within the park itself. The state government would be encouraged to set up
these parks in a public-private partnership mode.

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%. This has dwindled competitiveness and capability in
manufacturing some of APIs. The new pharmaceutical policy therefore will address the way and means to
restore and revive the API market.