Nine pharma companies to get Rs 5,000 crore government support in five years; here is why

The government on Wednesday announced a scheme for the promotion of research and innovation in the pharmaceutical medical technology (medtech) sector, with an aim to reduce the country’s dependence on imports of products such as orphan drugs — or drugs used in the treatment of rare diseases — and medical devices. As part of the scheme, estimated to cost the exchequer Rs 5,000 crore, nine manufacturers of drugs and medical devices will be selected to conduct research in six priority areas, according to an official notification. 

The scheme includes research and development and production activities as well as the establishment of centres of excellence. 

The government plans to establish centres of excellence in the seven existing National Institutes of Pharmaceutical Education & Research (NIPERs) located in Mohali, Ahmedabad, Hyderabad, Guwahati, Kolkata, Hajipur and Raebareli, at a tentative cost of Rs 700 crore over the five-year period, according to the notification by the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers dated August 16.

The funding disbursed for the projects will be recovered through benefit sharing (excluding refunded funding, if any) either through royalty or equity, it added. 

Here’s a list of six priority areas that have the clear potential to translate into commercial products or technology, under the scheme: 

Area 1

• New chemical entities
• New biological entities 
• Phyto-pharmaceuticals (natural product)

Area 2

• Complex generics
• Biosimilars

Area 3

• Precision medicine (targeted innovative therapeutics)

Area 4

• Medical devices

Area 5 

• Orphan drugs — or medicine used in the treatment of rare diseases 

Area 6

• Drug development for antimicrobial resistance (AMR)

The beneficiaries will have to pick either of the two options at the time of signing the agreement: 

• 10 per cent royalty on net sale of the product/technology till the patent is effective
• Equity not less than 100 per cent of the DoP support provided

The government said there is a need to increase the R&D expenditure in the country by further promoting research and innovation, and to shift the focus to new areas where the future trajectory of the pharma industry lies. 

The Indian pharma industry has largely remained confined to generic drugs, it said. “The total amount spent on pharma R&D is $50-60 billion in the US, $15-20 billion in China and around $3 billion in India. In the financial year 2021, the investments in R&D by the top 10 Indian pharma companies amounted around 7.2 per cent of their sales,” according to the ministry. 

Currently, India commands a market share of 3.4 per cent in the global pharmaceuticals industry. The country has about 450 recorded rare diseases.