Research-Linked Incentive Scheme Needed for the Pharmaceutical Industry

The Indian pharmaceutical industry eagerly waiting for the Research-Linked Incentives (RLI) which can be helpful raise India’s position in the global pharmaceutical industry on the innovation index.

According to the Department of Pharmaceuticals (DoP), the pharmaceutical sector spends around 5-6% of its revenue on research and development (R&D), which should increase to at least 15%. This will improve the market share of the Indian pharmaceutical industry from the current level of 3.4% worldwide, the Indian pharmaceutical business is ranked 14th (aspiration to reach under the top 10) in terms of value and 3rd in terms of volumes (aspiration to become 1st).

India has improved its ranking in the Global Innovation Index (GII) 2021 report to 46th position from 81st position in the year 2015, according to the World Intellectual Property Organisation (WIPO).

The Indian pharmaceutical companies lagged investments to R&D which should increase going forward to boost innovation, global partnerships, and knowledge sharing.

*Source – company annual report

Quotes from industry stakeholders

Raheel Shah, director of BDR Pharma Pvt Ltd said “We believe that these incentive schemes are testimony to the effort of the government as it plans India’s transition from a low-value, high-volume player to a high-value, high-volume player in the global pharmaceutical market.”

The government should come up with research-linked incentives for the pharmaceutical industry to ensure Indian companies play a strong role in innovative medicine and research, said Kiran Mazumdar-Shaw, executive chairperson, Biocon and Biocon Biologics. In an interview, she said that though India has played a huge role in novel products, there is a need to invest in research and innovation to launch new drugs and therapies, as it is beyond the reach of many companies.

“If we have a very lucrative scheme for companies to improve their research, it can be a great thing, so if a company is doing a phase one research some kind of incentive can be given, if it progresses to phase two then certain kind of incentive can be given and similar incentives can be followed as the research progresses,” Sudarshan Jain, secretary general, The Indian Pharmaceutical Alliance (IPA), told MoneyControl.

The main objective of the RLI scheme is to improve India’s position in the ‘global innovation index: patents & publications, which will help to enhance domestic capabilities and to nurture global positioning, and support India’s Atmanirbhar Bharat strategy. As of now, the core strength of the Indian pharma industry is that it can make generic versions of most drugs. Due to the RLI scheme, domestic pharmaceutical corporations will help to fulfill India’s vision to transition from a low-value, high-volume participant to a high-value, high-volume player in the global pharmaceutical market. Innovation is inherently risky in the pharma industry where ~90% of the molecules don’t get succeed; ~10% might get succeed. So that incentive scheme will encourage pharma companies to invest in R&D.

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