The business model under this IOA can potentially enable drug manufacturers to manage costs to adhere to the drug pricing caps so they continue production, ensuring a consistent supply of essential drugs.

The business model under this IOA can potentially reduce the cost of drugs thereby, reducing out-of-pocket expenditure on healthcare.

Due to the lack of raw material availability, it may not be possible to produce APIs at globally competitive rates.

The business model under this IOA can reduce the cost of medication, but given the existing price caps and 30% higher cost of production of APIs in India domestic manufacturing may not have the desired impact.

Improve access to affordable drugs for high burden disease categories and reduce dependence on imports by increasing domestic manufacturing of APIs.

NITI Aayog recognizes access to drugs and medical devices at affordable prices as an essential ingredient of Universal Health Coverage and highlights "access to affordable drugs and medical devices" as a target (5.4) It also calls for boosting domestic production of APIs by setting up six large API intermediate clusters (7.1)

The GOI approved a package of USD 1.3 billion in 2020 to boost the domestic production of bulk drugs and exports. It includes establishment of bulk drug park with common infrastructure facilities and a Production Linked Incentive (PLI) scheme to promote domestic production of 53 critical key starting materials (KSM), drug Intermediates and APIs (7.2)

GOI released the Draft Pharmaceutical Policy 2017 which proposed a shift in the focus of DPCO ‘from price control to the monitoring of drug prices, their availability and accessibility. It also suggested that formulations based on indigenously produced APIs and intermediaries would be exempted from price control for five years (7.2)

Fiscal incentives: A 15-year tax holiday for cluster developers/ participants (7.2) Income tax benefits for an initial period of 10 years for each product from the date of launch of the product (7.2)

Other incentives: Single-window environmental clearance to API manufacturers for all drugs once the plant is approved by the environment ministry A proposal had also been submitted to provide venture capital funding with a corpus of around USD 66 million to aid pharma SMEs (7.2) The Department of Pharmaceutical devised a cluster scheme specific to bulk drugs. It proposed a public-private partnership (PPP) model with government funding up to 70% of the project cost, subject to a ceiling of USD 2.6 million, to set up a cluster (7.2)

Complex regulatory environment with lengthy (takes about 2-3 years) and voluminous (about 20–25 approvals) approval process with multiple stakeholders. However, the GOI is taking measures to increase the ease of doing business such as by introducing the Draft Pharmaceutical Policy 2017 (7.2)

GoI has liberalised FDI policies in the pharma sector with 100% FDI – 74% under automatic route for brownfield projects and 100% for greenfield projects under the automatic route.(7.2)

Investors: Caisse de dépôt et placement du Québec, Aranda Investments, TA Associates, Morgan Stanley Private Equity Asia, Eight Roads Ventures , Ascent Capital Advisors, Enai Trading & Investment, Khorakiwala Holdings and Investments, Pronomz Ventures, Pinky Ventures, TPG Capital, Pantheon Ventures, ChrysCapital, Capital International, Cairnhill MOPE Investment Advisors, Rosewood Investments, MACE, True North Managers LLP, Tata Capital Private Equity; Alpha TC Holdings, Beta TC Holdings, HBM Private Equity, Ascent Capital Advisors, Steadview Capital, Malabar Funds, Carlyle, Warburg Pincus have invested in companies developing and manufacturing APIs in the past 5 years. There have been >15 public offerings and significant M&A activity in companies developing and manufacturing APIs between 2014-2019 (7.13) International companies such as Fosun Pharma have also invested in this space (7.13)

Corporations: The bulk drug industry is highly fragmented with around 1,500 plants that manufacture APIs. In FY18, the top 14-16 companies (including large formulation companies) comprised just 16-17% of the total market share. (7.2) Hetero, Aurobindo, Dishman, Divi’s, Jubilant Concord Biotech, Shilpa, Laurus Labs, Virchow, SeQuent Scientific are a few prominent companies. (7.2) A number of large pharma companies are active in this space including Sun Pharma, Abbott Laboratories, Dr. Reddy's and Mankind Pharma (7.14)

Organisation of Pharmaceutical Producers of India, Indian Medical Association (IMA), Nathealth - Healthcare Federation of India

Jharkhand, Meghalaya, Chhattisgarh, Haryana, Uttar Pradesh, Assam, Punjab, Sikkim. Jharkhand, Meghalaya, Chhattisgarh, Haryana, Uttar Pradesh and Assam have specific policies to promote biotechnology (7.4) and pharmaceuticals and rank in the bottom 10 States according to progress on healthcare-related SDGs according to an analysis based on the SDG India Index (7.5) Punjab has an operational Special Economic Zones for pharma production (7.2) and Sikkim has an emerging formulation cluster (7.4). Both these States performs below the national average on healthcare-related SDGs according analysis based on to the SDG India index (7.5) Kerala, Karnataka, Andhra Pradesh, Telangana, Maharashtra, Gujarat have operational Special Economic Zones for pharma production (7.2) but already perform well on healthcare-related SDGs according to an analysis based on the SDG India index (7.5) Baddi, an industrial town in Himachal Pradesh, accounting for 35-40% of India’s domestic pharmaceutical output (7.6) But Himachal Pradesh already ranks highly on healthcare-related SDGs according to an analysis based on the SDG India Index (7.5)