Incentivizing investment in research and development

The Policy is intended to incentivize investment specifically in production of biopharmaceuticals, patented drugs, new technology in medical devices for cancer care, imaging, etc. It may be noted that due to longer periods of research and development as well as cumbersome regulatory requirements, investment in the said areas has been challenging. Therefore, the Policy aims to provide fiscal as well as non-fiscal incentives through introducing direct or indirect funding. Such funding would include financial support provided for late-stage research. Funding would be further facilitated through blended finance products and a proposed innovation fund in the pharmaceutical sector, thereby alleviating reluctance in investments relating to long-term research.

PRIP is also an attempt to promote investments and allow companies to benefit from the research and institutional infrastructure present in the country. It is divided into two components, where component A would focus on establishment of better institutional infrastructure, and component B would focus on providing financial assistance to entities involved in research and innovation. PRIP is designed to be highly beneficial as it aims to provide financial assistance to companies across various levels of technological readiness under set criteria. This will benefit entities with large turnovers as well as startups in terms of research opportunity in specific priority areas.

Creating an ecosystem to enable innovation

While creating investment opportunities and optimization of regulatory procedures are immediate steps that have been taken to boost the pharma industry, long term solutions include creating stronger institutional and academic infrastructure in the MedTech area. The Policy aims to do so by linking industry with academia. It is proposed that institutes of national importance will be set up for skill development. Further, since the MedTech sector is multidisciplinary in nature, various technical institutes will have to collaborate to train manpower, thereby increasing employment opportunities. Esteemed international institutes will also be invited to establish their presence in the country. Such steps are proposed to be taken by the Indian Council of Pharmaceuticals and MedTech Research and Development (which is proposed to be created under this Policy).

Apart from promotion of research institutions, investments made by entrepreneurs and start-ups are intended to be incentivized through Atal Incubation Centres (AICs) and Established Incubation Centres (EICs), Further, such innovations hubs will also be integrated with reputed institutions.

It must be noted that through PRIP, the government intends to set up Centres of Excellence at National Institute of Pharmaceutical Education & Research (NIPERs) in cities like Mohali, Guwahati, Raebareli, Hajipur, etc. This measure should help in ensuring that employment and training opportunities are available in tier two cities and rural areas. Further, bulk drug parks and medical device parks are proposed to be established, amongst others, in Himachal Pradesh, Uttar Pradesh, Madhya Pradesh and Tamil Nadu. This will pave the way for even development of the pharmaceutical sector across the country, along with more cost-effective medical solutions for the citizens.

The aftermath of COVID-19 also has bearing on the Policy as its implementation is an effort to ensure that the country is not only self-reliant but also prepared for national health crises like the pandemic. The new Policy will be a milestone in the development of the pharma sector as it shifts focus from the low value generic drugs produced in the country to research and innovation. This will aid in shifting from a “cost-based to a value-based and innovation-based industry.”

This article was originally published in Financial Express on 31 October 2023 Co-written by: Arvind Sharma, Partner; Aahna Rajan, Associate. Click here for original article

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