Foreign Direct Investment in pharma grows at rapid pace: Eco 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

The Foreign Direct Investment in Indian pharmaceutical sector saw a substantial increase as there was an increase in demand for therapeutics and vaccines. This was stated in the Economic Survey which was tabled by Finance Minister Nirmala Sitharaman in Parliament early today.

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.

The Survey noted that during 2020-21, the total pharma exports stood at US $ 24.4 billion as against the total pharma imports of US $ 7 billion, thereby generating a trade surplus of US $ 17.5 billion.

However, the Survey pointed out that India is 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.

"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'."
However, the document also pointed out our import dependency. "Although a prominent player in formulations, the country is significantly dependent on the import of bulk drugs that are used in the formulation of medicines. 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.