With an aim of improving India’s position in the global pharmaceuticals market on the innovation index, the Narendra Modi government is preparing to launch a “research-linked incentive scheme”, News18.com has learnt.
Planning India’s shift away from a low-value, high-volume player to a high-value, high-volume player in the global pharma market, the government is in discussions over the proposed scheme with senior industry leaders of top domestic pharmaceutical firms, said sources.
Currently, the Indian pharmaceutical industry is ranked 14th in terms of value and constitutes a 3.4% market share across the globe.
According to the government’s pitch to top domestic pharmaceutical companies, if the industry adopts a business-as-usual approach, the market value would grow to around 108 billion USD by 2030.
However, if the industry focuses on growth enablers, that can help India grab a 4% market share reaching a market size of USD 130 billion.
The vision of the research-linked incentive scheme (RLI) in moonshot areas of the pharmaceutical sector is to help “transition India from a low-value, high-volume player to a high-value, high-volume player in the global pharma market”, said an official from the department of pharmaceuticals quoting the draft note shared with the heads of pharma companies.
The six moonshot areas of the pharmaceuticals sector were identified by the Niti Aayog, which are biosimilars, complex generics, orphan drugs, precision medicine, vaccines, and antimicrobial.
A moonshot is an ambitious, groundbreaking project undertaken without the expectation of near-term profitability.
What does India aim to achieve via the RLI scheme?
According to the draft document prepared by the department of pharmaceuticals, the pharma sector spends an average of 5-6% of its revenues on R&D, which should increase to at least 15%.
Moreover, the government has recognised that in India, R&D incentives account for 7.5% of total tax incentives but the pharma R&D incentives stand at just 2.3%.
The topmost objective of the RLI scheme is to improve India’s position in the ‘global innovation index: patents & publications’.
Also, the objectives are to enhance domestic capabilities and to nurture global champions apart from using India’s Atmanirbhar Bharat strategy to reshape the global value chain.
It also aims to boost exports and emerge as a champion in the moonshot sectors. “Creating high-skill employment opportunities such as additional PhDs, reverse migration of scientists to India is also one of the key objectives,” the official quoted above said.
How the scheme is planned to be rolled out
According to top government officials, it is proposed that only those companies that are committing to invest in the identified moonshot areas will be eligible for the scheme.
The beneficiaries will include companies that intend to start R&D in moonshot areas or are already conducting research in these areas.
News18.com understands that the categorisation of eligible companies will be divided into three criteria. The first is established pharma companies with academic collaboration (category 1). The second is research-oriented companies (or start-ups) that need support during initial levels of validation and trials (category 2). The third category is of companies graduating from category 1/category 2 to higher technology readiness levels.
Companies graduating out of category 1 and companies in category 3 will be mandated to commit a threshold investment of at least Rs 150 crore in moonshot areas for the next five years.
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