Local manufacturing of APIs Reducing Import Dependence

Janifha Evangeline

Production of 35 active pharmaceutical ingredients, that were imported earlier, has started in the country under the PLI scheme for the pharmaceuticals sector and these thirty-five active pharmaceutical ingredients (APIs) are among the 53 APIs for which India has 90% import dependence.

"The 35 APIs are being manufactured from 32 different manufacturing plants. This will give a boost to AatmaNirbhar Bharat," said Mandaviya, the Minister of Health & Family Welfare and Chemical and Fertilisers.

This would result in decreasing the import dependence of the key raw materials that are used in manufacturing medicines. Also, there has been a good response from the pharma industry to the PLI scheme. And manufacturing of the other APIs is also expected to begin in the country in due course of time, stated Mr. Mandaviya.

In 2021, the government had announced the Rs 15000 crore Production Linked Incentive scheme for the pharmaceutical sector, and 55 companies such as Dr. Reddy’s Laboratories, Sun Pharmaceutical Industries, Lupin, Aurobindo Pharma, Cipla, Cadila Healthcare, Mylan Laboratories, had qualified for incentives under this scheme.

While depending upon the threshold investments and sales criteria achieved by the applicant, the incentives are to be paid for a maximum period of 6 years to every qualified enterprise, the products covered under the scheme comprise active pharmaceutical ingredients, key starting material, formulations, drug intermediates, and in-vitro diagnostic medical devices, & biopharmaceuticals, among others.

Enhancing the manufacturing capabilities

The aim of the Production Linked Incentive scheme is to enhance the country’s manufacturing capabilities by increasing investment as well as production in the pharma sector & contributing to

product diversification to high-value goods in the pharmaceutical industry, according to the government of India.

Also, it aims "to create global champions out of India who have the potential to grow in size and scale using cutting edge technology and thereby penetrate the global value chains".

Three-fold increase in investments in the API sector

India started its journey in the 1970s, becoming a major supply hub in the global pharmaceutical ecosystem, with a strong bulk drug industry as its major strength. The industry has come a long way since then when it was heavily reliant on API export from Europe.

For private equity managers & global bulge-bracket investors, the Indian API sector is now a sought-after investment destination, while the pandemic has been reshaping the sector’s fortunes & boosting valuations.

Compared to 2020, the API sector has seen 3 times increase in investments in the year 2021. Furthermore, 3 private equity-led investment platforms have been developed particularly targeting the API sector, while at least 6 transactions are in different stages of negotiations, as per the bankers & fund managers.

A move to specialty and Green API production

The Indian API manufacturers find themselves with an opportunity to add value to their portfolios since the country is aiming to increase its global share of the API market.

While the major focus has been the shift to embrace green chemistry, Research & Development in the API space has observed the building of novel synthetic routes for developing more efficient as well as environmentally friendly alternatives.

Since more sustainable approaches are being demanded by green chemistry and flow chemistry markets and regulations, the concepts of ‘flow chemistry’ and ‘green chemistry’ have gained more significance.

“The government of India takes a very strict stance on environmental grounds and we embrace this strictness because it is motivating us to undertake actions to create new technologies and to operate an effective R&D that is recognized by the DISR (Department of Scientific and Industrial Research),” says Arun Doshi, chairman, and managing director at Surya Lifesciences.

While there is a myriad of opportunities presenting themselves in the API markets since manufacturers look to add value from green/specialized products, there has also been a trend of formulation companies coming into API production & vice versa. And this is expected to make sure greater security across the industry and this move will most likely create more value within the country’s pharmaceutical industry and add to its vision of becoming a more specialized and customized industry.