Facing criticism over its failure to create a favourable environment for the domestic bulk drug industry while foreign countries queue up with incentive-laced offers to woo Indian firms, the government has come up with a financial aid initiative to develop common facility centres (CFCs) at bulk drug parks across the country. The scheme will be implemented with the participation of state governments concerned and Rs 200 crore has been earmarked for 2018-20, it is learnt.
A tripartite agreement would be entered into among the Central government, the state government concerned and a state implementing agency (SIA) for CFC projects. The Department of Pharmaceuticals (DoP) has already prepared the guidelines for the initiative which would be implemented through a one-time grant-in-aid to the SIA.
According to the norms, the SIA will have the final say on infrastructure facilities needed to be considered as a CFC. The assessment will depend on the nature of manufacturing projects in any selected bulk drug park.
Two months back, the DoP constituted a task force to revive the indigenous bulk drug sector amid concerns over the country’s increasing dependence on import of active pharmaceutical ingredients (APIs) from China. But the high-level panel is yet to hold its maiden meeting. In the meantime, countries such as Uzbekistan and Bangladesh have announced incentives for API sector promotion and rolled out the red carpet for Indian investors. The government’s new financial assistance plan assumes significance against this backdrop.
Since active pharmaceutical ingredient (API) and intermediate units are spread across the country with a significant presence in four or five states, the benefit of common facilities such as central effluent treatment plants, captive power plants and incubation centres is not always available making the sector uncompetitive. According to industry sources, the proposed scheme is expected to address this issue. A well-equipped CFC can slash the cost of production by 25 per cent in the bulk drug park and help increase competitiveness, they say.
The aid programme will be a shot in the arm for upcoming bulk drug parks. It also gives state governments and corporations a constructive role. The land and building should be provided by the SIA and the facility should go on stream within two years from the date of final approval. The maximum limit for the grant-in-aid would be Rs100 crore per CFC or 70 per cent of its project cost, whichever is less. The project cost includes cost of land, building, pre-operative expenses like administrative and management support including the salary of CEO, engineers, other experts and staff during the project implementation period, machinery and support infrastructure such as water supply, electricity and margin money for working capital.
Escalation in project cost over and above the sanctioned amount should be borne by the SIA and the Central government won’t accept any financial liability arising out of operation of any CFC. The CFC user charges will be on differential rate basis, which means lower fee for small units and higher fee for medium ones, but would be lesser than prevailing market prices.
Funds will be released in installments depending upon the implementation plan. The proposals under the scheme will be considered for approval by a steering committee comprising top officials from the DoP and the health ministry. The panel may co-opt representatives of industry associations, R and D institutions and other expert organisations as members or special invitees.
The domestic API manufacturers have been vocal in their criticism of the government over the prevailing regulatory challenges. Despite producing a fifth of the world’s generic drugs, India imported APIs worth Rs 11,635 crore during the last fiscal. Bulk drugs worth Rs13,853 crore were purchased from China in 2015-16 or 65.3 per cent of the Rs21,217 crore total APIs consumed in the country. These included ingredients for essential antibiotics. The rest came from Europe, Japan and the US.