Make in IndiaPHARMACEUTICALS

MEVIN MATHEW15PMM543

Flow of Presentation• What is “Make in India”?• Reasons for the initiative• Market Trends and overview• Statistics favoring making pharmaceuticals in India• Growth drivers• India advantage• Policies adopted• Cases to discuss

MAKE IN INDIA• Make in India is aimed at making India a manufacturing hub and economic

transformation while eliminating the unnecessary laws and regulations, making bureaucratic processes easier, make government more transparent, responsive and accountable and to take manufacturing growth to 10% on a sustainable basis.

Objectives• To make investing in manufacturing more attractive to domestic and foreign investors• To give the Indian economy global recognition• To create competitive industrial environment• To development infrastructure• To invite latest technologies• To generate employment and skill formation

Reasons for the initiative

STATUS OF MANUFACTURING SECTOR• The situation of the manufacturing sector in India is a cause

of concern.• At 16% value added to GDP, the sector does not seem

representative of its potential which should have been 25%. • In most rapidly developing economies, manufacturing

sector contributes 25-40% to the GDP such as Thailand’s manufacturing sector value added to GDP is around 34%, China 32%, South Korea 31%, Indonesia 24% and Germany 22%.

BOTTLENECKS TO MANUFACTURING SECTOR

• Inadequate infrastructural framework• Lack of single window clearance facilities• Inadequate availability of land for

industrial purposes• Unbalanced growth in logistics sector

STATISTICS FAVOURING MAKING PHARMACEUTICALS IN INDIA

INCREASING INVESTMENTS IN THE SECTOR• The Indian pharmaceuticals market increased at a CAGR of 17.46 %in 2015 from US$ 6 billion in 2005 and is expected to expand at a CAGR of 15.92 % to US$ 55 billion by 2020.

• By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth and sixth largest market globally in absolute size.

• India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to  India over others.

GENERIC DRUGS FORM THE LARGEST SEGMENT

• With 70 per cent of market share (in terms of revenues), generic   drugs form the largest segment of the Indian pharmaceutical sector.

• India supply 20 per cent of global generic medicines market   exports in terms of volume, making the country the largest   provider of generic medicines globally and expected to expand   even further in coming years

• Over the Counter (OTC) medicines and patented drugs  constitute 21 per cent and 9 per cent

Forecasted statistics• The country’s pharmaceuticals industry is expected to account for

about 3.6% of the global pharma industry by value and currently accounts for 10% by volume, by the end of 2016.

• The healthcare sector in India is expected to grow to USD 250 Billion by 2020 from USD 65 Billion currently.

• The generics market is expected to grow to USD 26.1 Billion by the end of 2016

COST EFFICIENCY AND COMPETENCY CONTINUE TO BE INDIA’S FORTECost efficiency• India’s cost of production is nearly

60 per cent lower than that of the US and almost half of that of Europe

• Labor costs are 50–55 per cent cheaper than in Western countries

• The cost of setting up a production plant in India is 40 per cent lower than in Western countries

• Cost-efficiency continues to create opportunities for Indian companies in emerging markets and Africa

Competency

• India has a skilled workforce as well as high managerial and technical competence in comparison to its peers in Asia

• India has the second largest number of USFDA-approved manufacturing plants outside the US

• India has 2,633 FDA-approved drug products• India has over 546 USFDA-approved company sites, the

highest number outside the US

POLICIES ADOPTED

100% Foreign Direct Investment (FDI) is allowed under the automatic route for greenfield projects

For brownfield project investments, up to 100% FDI is permitted under the government route

The government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approvals

‘Non-compete’ clauses are not allowed except in special circumstances, with the approval of the Foreign Investment

Promotion Board.

The FDI is subject to applicable regulations and laws

FDI POLICY

EXPORT INCENTIVES • Focus product scheme.• Special focus product

scheme.• Focus market scheme.• Export promotion capital

goods scheme.

AREA-BASED INCENTIVES• Incentives for units in

SEZ/NIMZ as specified in respective acts.

• Setting up of projects in special areas

• Industrial corridors

UNITS IN CLUSTERS• A scheme for the

development of common facilities like effluent treatment, testing centres etc.

STATE INCENTIVES• Besides the above, each state in

India offers additional incentives for industrial projects.

• 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.

R&D BENEFITSA weighted deduction of 200% is granted to assesses for any sum paid to a national laboratory, university or institute of technology.

Weighted tax deduction of 150% under Income Tax Act for both capital and revenue expenditure incurred on scientific research and development.

A national center to help develop bulk drugs and facilitate their research is being set up in Hyderabad.

Duty free import of Pharmaceuticals reference standards.

10% tax rebate on foreign revenue generated due to products patented and developed in India

FINANCIAL SUPPORTSETU (Self Employment and Talent Utilization) to be established as a techno-financial, incubation and facilitation program to support all aspects of a startup business. INR 10 Billion to be set aside as initial amount in NITI.

Atal Innovation Mission (AIM) to be established in NITI to provide an Innovation Promotion Platform involving academicians, and drawing upon national and international experiences to foster a culture of innovation, research and development

The threshold limit of transfer pricing regulations to specified domestic transactions increased from INR 0.05 billion to INR 0.2 Billion.

FINANCIAL SUPPORT

Service Tax exemption for common effluent treatment plant operators.

Rate of income tax on royalty and fees for technical services reduced from 25% to 10% to facilitate technology inflow

CASES TO DISCUSS

Make in India boost: Government to incentivise companies to produce bulk drugs •  The government is working on a package to incentivise both state-run and private

companies to produce ingredients that are used in making medicines as part of a plan to reduce dependence on China and boost the 'Make in India' program.

• As part of the package, the government is mulling revival of two sick public sector units involved in production of active pharmaceutical ingredients (APIs) or bulk drugs, besides inviting private companies to set up manufacturing units.

• There are five central government run units in pharmaceutical sector • Karnataka Antibiotics & Pharmaceuticals• Rajasthan Drugs and Pharmaceuticals • Hindustan Antibiotics• Bengal Chemicals & Pharmaceuticals • Indian Drugs and Pharmaceuticals (IDPL) of which only the first two have been

making profit.

 

Make In India: Pharma entrepreneurs urge industry to address compliance issues• Some of India's top pharmaceutical entrepreneurs have urged

the industry to fix their compliance issues with regulators to create an image of India as the producer of best quality medicines 

• Also urged drug makers to innovate to leap to the next level of growth in the sector. 

• Out of the eleven warning letters issued so far by the Office of Manufacturing Quality of the US Food and Drug Administration's (US FDA) this year, six were issued to India-based drug companies

• While some of the units of major Indian drug companies such as Wockhardt and Sun Pharma have been struggling for a few years now to comply with the ever-increasing stringent current Good Manufacturing Practices (cGMP) norms of the US drug regulator

• In November 2015 the market capitalization of India’s top five pharma companies, Sun Pharmaceutical Industries Ltd, Dr Reddy’s Laboratories Ltd, Cipla Ltd, Lupin Ltd and Wockhardt Ltd, have fallen by Rs.99,235 crore

• Much of the fall can be attributed to warnings and import alerts issued by the US Food and Drug Administration (US FDA) on manufacturing plants of the five companies.

• "I see India as the potential pharmacy hub of the world 

• We should focus on fixing the compliance.• If manufacturing in India is accepted globally, it will

significantly improve the perception of quality of Indian products

• Only this can be the cornerstone for the success of MAKE IN INDIA- PHARMACEUTICALS" 

INFERENCE Economic growth of the

industry along with the availability of generic goods and healthy competition is the need of the hour for India.

After analyzing the impact of the Make in India in the Indian pharmaceutical industry, it is established that India needs adequate FDI and its spillovers for the growth of the industry

THANK YOU