The Department of Pharmaceuticals (DoP) will rope in a third-party project management consultant (PMC) to execute the proposed pharmaceutical cluster development programme to be implemented on a public-private partnership (PPP) format. The scheme, aimed at creating common facilities such as testing and research centres, effluent treatment plants and logistic platforms, would be implemented across the country through special purpose vehicles (SPVs).

Developing drug manufacturing facilities with high level of productivity and innovative capabilities is a capital intensive task and cannot be achieved by small and medium firms on their own due to financial constraints. The Central government has introduced the cluster development programme to resolve this issue. Presently such clusters exist in Baddi in Himachal Pradesh, Haridwar in Uttarakhand, Gurgaon in Haryana, Pashmalyram and Khazipalli in Andhra Pradesh, etc.

The new initiative to set up high-tech common facilities at pharmaceutical clusters is expected to help industry slash expenditure by at least 20 per cent, meet environmental standards at a reduced cost and optimise resources. According to official data available, the government has earmarked Rs. 20-crore aid for the project for 2018-20 and the grant will be released in a phased manner to the SPV concerned. The scheme will be reviewed after two years from the date of initiation.

The consultancy firm, to be selected by the department on nomination basis, will be the bridge between the DoP and the SPV. It will manage the infrastructure development programme from conceptualisation to commissioning and report directly to the DoP. The consultancy fee will be separate from the grant being given to projects.

An SPV should be a legal entity, including registered societies, trusts or companies, with members located within a radius of 15km within the proposed cluster. It should have a provision for enrolling new members to enable prospective entrepreneurs in the cluster to utilise the facility. There should be a minimum of 10 pharma units, including bulk drug, medical device, Ayurvedic, Unani and cosmetics units serving as members of the SPV. However, the scope of the aid shall only be for the development of common facilities and won’t be available to individual production units.

Setting up of an SPV is mandatory to take part in the initiative. A tripartite agreement should be signed among the central government, state government concerned and the SPV for developing the common facility.

The PMC will also play a key role in sensitising the industry and other potential beneficiaries on the scheme and its benefits and guide them to form the SPV. It will appraise the project report indicating financial viability, commercial sustainability and socio-economic impact and assist the DoP in disbursement of funds.