Innovative credit products that include funds against Intellectual property rights are being examined by the government with an aim to increase the credit flow to the pharmaceuticals industry. This has set up a working group to look into financing issues in the sector.
The group will comprise officials from leading pharma companies as well as banks such as SBI, other than a representation from the finance & chemicals and fertilizers ministries. "Sector-specific issues of pharmaceuticals companies will be taken up by this group, including credit requirement, faster loan clearances, and streamlining of procedures," said an official aware of the matter. The priority sector guidelines between reviewed to address the regional disparity in the flow of credit.
This is coupled with emerging national priorities, with the evolving Indian economy & penetration of banking & financial services in rural regions. For improving the credit flow to different priority sectors, the co-lending model by banks & NFBCs aims to leverage the comparative advantage of these two entities.
How to evaluate pharmaceutical companies as investments
One of the biggest hindrances for most investors while targeting their next big pharmaceutical breakthrough is knowing how to evaluate drug companies as investments. Secondly, they are also worried about whether these organizations will be successful in winning approval from the FDA and bringing products to market. Investors have to evaluate an enterprises’ “pipeline” which is how many drugs an enterprise has in development as well as the different stages of clinical testing. Investors have to look for enterprises that possess a strong pipeline, with a track record of successfully taking drugs to market as well as drugs which have passed FDA scrutiny. Steroids, immune system suppressants, potential vaccines, etc which are in various stages of R&D are known as the pipeline.
It takes at least a decade and USD 2.6 billion for a drug from a scientist’s notebook to make it to pharmacy counters, on average.
PLI scheme worth 15000 crore rupees
The simplification of a loan application, inclusion of the pharma sector in micro, small & medium enterprises, collateral-free loans, and the requirement for schemes that include Credit Guarantee Fund Trust for Micro and Small Enterprises for pharma and ancillary units are the demands of the pharma sector. "Some of these suggestions are being deliberated on, including innovative credit products like funds against IPR," said the official.
While a production-linked incentive scheme worth rupees 15000 crores for high-value products in pharmaceuticals has been approved by the government since it has identified pharma as a champion sector, there is a separate scheme for setting up parks for bulk drugs. The pharma industry not only accounts for about 1.72 percent of India’s GDP but the Indian pharma sector is the world’s 3rd largest by volume and fourteenth largest in terms of value. The government is looking at various sectors for addressing issues that are related to credit as well as to push lending in the productive sectors of the economy, stated a senior bank executive.
Proposal to roll out National Digital Health Ecosystem
Dr. Viranchi Shah, national president of the Indian Drug Manufacturers’ Association (IDMA), said that “IDMA congratulates the finance minister for presenting a balanced budget. We understand that the budget has proposals for the promotion of R&D in pharma, and that ease of doing business and supportive policy will be provided. This is a welcome step. In recent years Indian scientists and pharma business have demonstrated their capabilities in research, particularly in vaccines.
A lot more can be achieved in the pharma R&D space. We await detailed proposals.” Vani Manja, country managing director at Boehringer Ingelheim India, said, “our progress in research and development is inextricably linked to fostering a culture of innovation. Allowing for additional provisions towards establishing a stronger IPR ecosystem in the country is imperative to improve the Ease of Doing Index in India and further propel FDI in the pharmaceutical sector.” The Union finance minister’s proposal to roll out National Digital Health Ecosystem, promote research and development in pharma, & PLI Schemes, and extend Emergency Credit Line Guarantee Scheme till March 2023 to enable MSMEs to mitigate the adverse impact of COVID-19 has been welcomed by Pharmaceutical & Medtech industry.
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