BUSINESS
Anticipating higher investments from the pharmaceutical companies, the government has increased the allocation for the pharma PLI (performance-linked incentive) scheme in the Budget 2024-25. The budget has earmarked Rs 2,143 crore in the current financial year as compared to Rs 1,200 crore in the previous year. Experts believe that the higher incentives for the pharma sector is coming at a time when the volume growth has tapered down in the domestic market , and the sales growth has been largely driven by the price increases. But at the same time, there has been renewed focus by the pharma companies on complex therapies and life -saving drugs. “Bigger players like Sun Pharma or medium-sized companies like Zydus Lifesciences are focussing on advanced biosimilars and gene/cell therapies. It’s clear that the government is keen to incentivise these companies who are launching complex products,” said Unnati Jadhav, research analyst at KR Choksey. “Whatever sales growth is happening in the domestic market is due to WPI (wholesale price index) adjustments. The volume growth remains muted though. On the other hand, the volumes in the exports market, particularly US, are holding up due to drugs shortages in the developed markets. With higher PLI funds allocated in the current fiscal, the government is promoting the production of speciality drugs in India ,” said a pharma analyst. As per Rubix Data Sciences, drug formulations and biologicals dominate India’s pharmaceutical exports, accounting for roughly 73% of the total value. Regulatory headwinds and lower approvals for abbreviated new drug applications (ANDAs) could act as restraints to growth in developed markets. However, at the same time, increasing focus on the synthesis segment of APIs and complex and speciality products could support the growth in future. Assuming that the incentives in the PLI schemes is 5% of the incremental sales of the participating entities, the government is expecting incremental sales of Rs 43,000 crore in FY25, experts said. So far, the PLI scheme has attracted investments of Rs 33,964.05 crore since its launch in 2021. Within it, the maximum investment has gone into the pharmaceuticals segment followed by bulk drugs and medical devices. The scheme has also generated total employment of 80,724 so far. “All the segments covered under the PLI in pharma scheme are doing well. The focus on bulk drugs category has particularly reduced the dependence on imports to some extent but more needs to be done,” said Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance (IPA). Launched under the Atmanirbharta initiative, the financial outlay of the PLI scheme is Rs 15,000 crore over a period of six years. So far, 55 applicants have been selected under the scheme, including 20 micro, small & medium enterprises ( MSMEs ). Get live Share Market updates, Stock Market Quotes , and the latest India News … Read More and business news on Financial Express. Download the Financial Express App for the latest finance news. None
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