The Department of pharmaceuticals had set up a high level committee headed by Dr. V. M. Katoch, the former secretary, department of health research, last year to formulate a long term policy and strategy for reviving domestic manufacture of APIs in the country. The appointment of committee is in the context of deplorable state of API manufacture in the country with almost total dependence on China for India’s requirements of APIs. The committee in its report submitted in February, 2015 made some sweeping recommendations for the revival of API manufacturing in India. One such proposal is cluster development model for the pharmaceutical sector with tax free status to cluster developers and cluster participants for 15 years. Immediate investment will be provided by the government for development of clusters in the form of a professionally managed dedicated equity fund for the promotion of manufacture of APIs. All central and state duties, taxes, levies etc in creating the entire cluster infrastructure and individual unit infrastructure should be made nil. For this a unit should ensure more than 50 per cent capacity utilization for NLEM products. The panel also recommended soft loans to the units through interest subvention up to 7.5 per cent, at least on par with interbank lending rates. Capex loan to the manufacturers of APIs for high priority drugs with a moratorium of 10 years for repayment was another suggestion. Alternatively debt instruments should be long term ie 3+5 years for APIs/intermediates and 3+7 years for fermentation units. Margin money for strategic projects should be cut down, preferably to 15 per cent equity and 85 per cent debt. Income tax rebates for upgradation of the existing R&D facilities of the companies should be doubled to 400 per cent from existing 200 per cent so as to encourage development of new APIs. As a part of long term strategy to support API sector, the panel felt that coordination between the ministry of commerce and other regulatory authorities is necessary for measures like anti-dumping and safeguard duties.

Revival of public sector drug units such as Indian Drugs and Pharmaceuticals Ltd and Hindustan Antibiotics Ltd is another significant proposal for strengthening growth of APIs and intermediates considering the leading roles they played in the beginning of Indian pharmaceutical industry in fifties and sixties. The Katoch panel said that revival of IDPL and HAL for starting the manufacture of essential critical drugs such as penicillins, paracetamol and vaccines or leasing out these plants is one good option for consideration. Infusion of capital, about Rs. 500 crore each, is recommended to these units to start manufacturing important APIs. On the R&D front, the committee recommended stronger industry-academia interaction so as to facilitate movement of scientists between industry and academic institutions. Katoch also stressed the need for industry interaction with various science departments and agencies of the government like DST, DBT, CSIR, ICMR etc for best procedures of production. Adoption and implementation of most of these recommendations is extremely urgent considering the non availability of most of the bulk drugs indigenously. Indian pharmaceutical industry is at the mercy of Chinese API makers today with they frequently jacking up prices most of the APIs forcing Indian formulators to correspondingly raise the formulation prices. A situation like this should not be allowed to drag on for long considering growing number of poor and sick population in the country.