NEW DELHI: Foreign direct investment in India's pharmaceutical sector saw a "sudden spurt" in 2020-21 mainly on account of investments to meet COVID-19-related demands for therapeutics and vaccines, according to the Economic Survey.
In the April-September 2021 period, the FDI inflows continued to be buoyant at Rs 4,413 crore, growing at the rate of 53 per cent over the same period in 2020-21, according to the Survey tabled in Parliament by Finance Minister Nirmala Sitharaman on Monday.
Although price competitiveness and good quality have enabled homegrown medicine producers to be dominant players in the world market, thereby making the country the 'Pharmacy of the World', the Survey pointed out that India is significantly dependent on the import of bulk drugs that are used in the formulation of medicines.
"The extraordinary growth of foreign investments in the pharma sector is mainly on account of investments to meet COVID-19 related demands for therapeutics and vaccines," it said.
Stating that the Indian pharmaceutical industry ranks third in the world in production by volume, the Survey said that during 2020-21, the total pharma export stood at USD 24.4 billion as against the total pharma import of USS 7.0 billion, thereby generating a trade surplus of USD 17.5 billion.
"India is the largest supplier of generic medicines with a 20 per cent share in the global supply," said the Survey for 2021-22.
Elaborating on the reasons for the success of the sector, the Survey said, "Price competitiveness and good quality have enabled Indian medicines producers to be dominant players in the world market, thereby making the country the 'Pharmacy of the World'."
The document that details the state of the economy ahead of the government's Budget for the fiscal year beginning April 1, 2022, however, drew attention to India's import dependence on bulk drugs.
"Although a prominent player in formulations, the country is significantly dependent on the import of bulk drugs that are used in the formulation of the medicine. In certain cases, import dependence varies between 80-100 per cent," it said.
This issue of import dependence for critical bulk drugs was examined by a high-level committee, and a composite set of actions to incentivise bulk drug production have been initiated and the government has taken initiatives to address the requirement of the pharmaceutical and medical devices industry.
The steps include a scheme for the promotion of bulk drug parks that envisages the creation of world-class common infrastructure facilities; Rs 6,940-crore production-linked incentive (PLI) scheme for bulk drugs and the Rs 15,000-crore PLI for pharmaceuticals.
Besides, the government has also announced PLI for medical devices with a total financial outlay of Rs 3,420 crore.
Outlining the measures taken by the government to make medicines accessible, especially during the pandemic, the Survey said that based on recommendations of a standing committee on affordable medicines and health products (SCAMHP), NITI Aayog, National Pharmaceutical Pricing Authority (NPPA), the government capped the trade margin for oxygen concentrators at 70 per cent on price to distributor (PTD).
Trade margins of pulse oximeter, glucometer, blood pressure monitor, nebulizer and digital thermometer were also capped, it added.
"As a result, most of the brands of these devices have dropped prices up to 89 per cent," it said adding that most of the drugs used for COVID-19 management are scheduled drugs for which ceiling price has been given by NPPA.
"Even in the case of a few non-scheduled medicines like Remdesivir, which are part of COVID-19 protocol, on government intervention, MRPs of various brands of Remdesivir have been reduced voluntarily by the major manufacturers/marketers," it said.