The Government of India prioritizes domestic manufacturing and innovation through initiatives like ‘Make in India.’ The recent Promotion of Research and Innovation in Pharma-MedTech (PRIP) Scheme 2023 allocates USD 600 million for five years, focusing on Pharmaceuticals and Medical Devices. This supports an R&D boost in the pharmaceutical sector, encouraging increased spending and identifying five priority areas for future growth. Additionally, it addresses the medical device industry’s import dependency, aiming to promote innovation and local manufacturing, ultimately positioning India as a global healthcare hub.
The Government of India (GoI) has been steadfast in its commitment to promote manufacturing and innovation within the country. It has actively encouraged industries to embrace the ‘Make in India’ initiative, both for domestic consumption and on the global stage. To facilitate this, the GoI has consistently implemented policy and regulatory measures aimed at supporting innovation and production within India. Notable initiatives in this regard include the AtmaNirbhar Bharat program, Production Linked Incentive Schemes, the National Medical Device Policy, and the proposed New Drugs and Cosmetics Act. The latest addition to this lineup is the Promotion of Research and Innovation in Pharma-MedTech (PRIP) Scheme 2023, which was announced by the GoI last month. Under this scheme, the government has allocated USD 600 million over five years to foster research and innovation in the Pharmaceuticals and Medical Devices sectors.
The pharmaceutical industry is characterized by its reliance on extensive research and development (R&D) efforts to remain competitive and drive growth. India’s pharmaceutical sector has achieved significant milestones over the past four decades, earning the moniker “Pharmacy of the World.” While Indian pharmaceutical companies have excelled in producing generic drugs, which do not necessitate extensive R&D like patented drugs or New Chemical Entities (NCEs), the industry’s overall R&D expenditure has typically ranged from 3% to 5% of sales, with the top 10 companies allocating up to 7%. There is a pressing need to significantly increase this R&D spending to ensure sustained competitiveness and advance further in the value chain. Recognizing this imperative, the GoI has identified five priority areas that hold the potential to propel the industry into the future.
The PRIP scheme also extends its coverage to the Medical Devices industry, which plays an essential role in the healthcare sector. This industry currently boasts a market size of approximately USD 11 billion, with projections indicating a potential USD 50 billion market by 2047. Despite facing challenges, such as the disruption caused by the COVID pandemic, the Medical Devices sector is expected to maintain a robust growth trajectory, with an anticipated Compound Annual Growth Rate (CAGR) of 15-18% over the next decade. Importantly, more than 70% of medical devices are still imported, underscoring the need for measures to enhance domestic manufacturing. In a similar vein to the pharmaceutical sector, the GoI has introduced reforms such as the New Medical Devices Rules 2017 and the Medical Device Policy 2023, supplemented by Production Linked Incentives (PLIs) to encourage local production. However, the missing piece in this reform puzzle was a comprehensive focus on R&D. With the PRIP scheme, the government aims to address this gap while simultaneously offering the industry the opportunity to lead in the development of affordable and innovative medical technologies.
Overall, innovation is the bedrock of any nation’s progress, and a country that neglects research and development will find its developmental journey hindered. While India has been conducting R&D at its own pace, considering resource constraints and knowledge limitations, it required a catalyst to accelerate its development. The PRIP scheme serves as this catalyst, poised to expedite R&D in the country and cultivate a culture of sustained research and innovation. This also marks a significant shift in the healthcare sector, transitioning from a cost-centric competitiveness model to one driven by innovation-led growth. The policy adopts a foundational approach, starting with academic research on pharmaceuticals and medical devices and then fostering collaboration with the industry to translate this knowledge into innovative commercial products. The establishment of specific Centers of Excellence (CoEs) at the National Institutes of Pharmaceutical Education and Research (NIPERs), staffed with research graduates, will provide the pharmaceutical and medical devices industry with the skilled workforce needed to drive ongoing R&D efforts. Component B of the scheme encompasses a wide spectrum, from complex generics to NCEs, offering ample opportunities for organizations across the board to participate and innovate in India.
The PRIP scheme, in tandem with the development of Bulk Drug and Medical Device Parks and PLI schemes, will bolster the entire value chain of domestic manufacturing. The GoI has laid a strong foundation for the healthcare sector, not only to maintain its leadership in pharmaceuticals but also to emerge as a significant player in the medical devices industry. It is crucial to emphasize that these initiatives position India on the global stage, attracting skilled labor, increasing capital investments, and shifting of manufacturing bases. Over the coming years, India will establish a comprehensive ecosystem for healthcare, opening doors to the world.