Zoomed Out | Why PRIP is a groundbreaking enabler for the pharma and med-tech sector

The Indian pharmaceuticals (“pharma”) industry commands a significant share of over 20% of the global medicine supply chain. Notably, the industry has played a pivotal role in elevating India to the esteemed status as the “pharmacy of the world.” However, it is important to assess how many of these medicines are actually discovered in India. Interestingly, it is very minimal! The next question that arises is, why?

The answer lies in India's relatively modest investment in research and development (R&D) which adds up to just about 5% of what the United States spends and a fifth of what China spent. As per the Standing Committee on Health report in 2022, while the US spends 2% of its GDP in health research, India ranks far behind, earmarking only 0.01%. Sadly, this glaring disparity continues to persist.

In light of this, and to build an R&D ecosystem to become a prominent leader in the global value chain, the Indian government announced a programme to promote research and innovation in pharmaceuticals through centres of excellence (CoE) in the 2023-24 Budget.

Fostering R&D growth in India through PRIP
In August 2023, the government introduced the Scheme for Promotion of Research and Innovation in the Pharmaceutical and Medical Technology Sector (PRIP), 2023, under the National Policy on Research & Development and Innovation in the pharma medtech sector. The scheme is backed by a substantial financial overlay of ₹5000 crore spread over five years.

The PRIP scheme encourages established pharma companies to engage in collaborative research with the National Institutes of Pharmaceutical Education and Research (NIPERs) and avail their research infrastructure. It also provides financial assistance to companies expediting market launching and large-scale commercialisation of products and technologies with significant commercial potential or societal impact. A small allocation of financial support is also available for Indian start-ups and MSMEs carrying out research projects in identified priority areas.

Unlike the production-linked incentive (PLI) scheme, which is a subsidy/grant programme to promote manufacturing, PRIP is a novel financial support scheme. The terms of financial assistance make the government participate as a risk and benefit sharing partner.

Upon successful completion and commercialisation of products, the government is entitled to receive returns in the form of royalties, or an equity-based model, and no returns in case of failure. This is big step in establishing a new framework for nurturing innovation and research in the pharma and medtech sector with accountability and risk participation of all stakeholders.

Can PRIP revolutionise the trajectory of the sector?
Certainly. But the transformation won't transpire overnight or within a year. This scheme envisions a progressive shift over the course of the next five years, fostering development of innovative pharmaceuticals and medical devices. Indigenous production of medicines and med-devices can substantially reduce the cost of advanced healthcare services and expand access to rural and underserved areas in the country. Nevertheless, the scheme in its current form requires complementary factors to achieve substantial and scalable impact.

Mere financial support and institutional collaboration through NIPERS may not be enough. Other incentives such as creating an ecosystem for protecting and monetising Intellectual Property rights (IPR), availability of specialised and experienced pharmaceutical researchers and partnerships with internationally recognised facilities/innovation labs for clinical trials, are also essential to attract large pharmaceuticals and medical technology companies.

Similarly, providing tax incentives and assuring policy certainty can serve as a powerful catalyst for advancing investments in innovation and product development. Likewise, giving preference to domestically developed and commercialised products in procurement decisions by government hospitals and medical institutions, can serve as a driving force for R&D within the country.

Charting the path ahead
R&D and innovation are long and financially encumbering processes with higher risks of failures. Hence ample time must be given for both the industry and the institutes to sustain and flourish. PRIP is the right step towards achieving this and making India a pharma medtech innovation hub.

The original article was published in CNBC TV 18 on 21st October 2023.