Prime Minister of India, Narendra Modi launched the Make in India initiative on 25 September 2014. The major objective of this initiative is to attract capital and technological investment thereby enhancing the economy, creating jobs, increase GDP growth and tax revenue. This Make in India initiative focuses on 25 major sectors including pharmaceuticals, biotechnology, hospitality and tourism. (Stunning First Visit PM Modi in the US: What it means to the Life Science Sector). To show that the government is serious about Make in India, the government introduced a serious of positive reforms including:

  • Foreign equity caps in various sectors were relaxed or removed.
  • Application of licenses made online
  • Validity of licenses increased to 3 years
  • Increase in foreign direct investments (FDI)

Call for Pharmaceutical Companies to Make in India

Indian patient pool is expected to rise to over 20% in the next 10 years.  With patent drugs worth US $255 billion going off-patent in the next five years, there is a tremendous surge in generic products and opportunities for generic drug manufacturers world wide. With India expected to hold 20% of global exports for generics by 2020, this industry is exciting to be a part of. The Indian pharmaceutical market is expected to be the 3rd largest market by 2020 a revenue of US $45 billion and a growth rate of 12.1% per annum. A total of US $300 billion is expected to be spent on infrastructure.  India is the largest exporter of formulations with 14% market share and ranks 12th in the world in terms of export value. Double-digit growth is expected over the next five years.

WHY INVEST IN INDIA

Make Pharmaceuticals in India

  1. LOWER COSTS:
    a. Skilled workforce with high competency at lower costs
    b. Cost of production is lower than in the US and Europe
  2. MARKET FRIENDLY POLICIES BY NEW GOVERNMENT
    a. Approval time for new facilities has been drastically reduced.
  3. RURAL AREA GROWTH
    a. The market share of hospitals in rural India is expected to increase from 13.1% in 2009 to 26% in 2020.
    b. With increasing penetration of chemists, especially in rural India, OTC drugs will be readily available.
    c. Pharma companies have increased spending to tap rural markets and develop better infrastructure.
  4. FDI POLICY
    a. 100% FDI is allowed under the automatic route for greenfield projects.
    b. For brownfield project investments, up to 100% FDI is permitted under the government route.
    c. ‘Non-compete’ clauses are not allowed except in special circumstances, with the approval of the Foreign Investment Promotion Board.
  5. FINANCIAL SUPPORT
    a. Creation of new drug testing laboratories and further strengthening of the 31 existing state laboratories.
    b. Allocation of INR 5000 Million to set up four more institutions of the stature of AIIMS in Andhra Pradesh, West Bengal, Maharashtra and U.P.
  6. STATE INCENTIVES:
    a. Incentives are in areas like subsidised land cost, relaxation in stamp duty on sale/lease of land, power tariff incentives, concessional rate of interest on loans, investment subsidies/tax incentives, backward areas subsidies, special incentive packages for mega projects etc.
  7. R&D BENEFITS:
    a. A weighted tax deduction is given under section 35 (2AA) of the Income Tax Act.
    b. A weighted deduction of 200% is granted to assess for any sum paid to a national laboratory, university or institute of technology, or specified persons with a specific direction provided that the said sum is used for scientific research within a program approved by the prescribed authority.
    c. Weighted tax deduction of 200% under section 35 (2AB) of the Income Tax Act for both capital and revenue expenditure incurred on scientific research and development. Expenditure on land and buildings are not eligible for deduction.

FOREIGN INVESTORS

Teva Pharmaceuticals (Israel)
Nipro Corporation (Japan)
Procter & Gamble (USA)
Pfizer (USA)
Glaxo Smith Kline (UK)
Johnson & Johnson (USA)
Otsuka Pharmaceutical (Japan)
AstraZeneca (Sweden-UK)

AGENCIES

• Department of Pharmaceuticals, Ministry of Chemicals & Pharmaceuticals
• Indian Drug Manufacturers Association
• Bulk Drug Manufacturers Association
• Pharmexcil
• Federation of Pharma Entrepreneurs
• Confederation of Indian Pharmaceutical Industry
• Indian Pharmaceutical Alliance