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Source: This post is created based on the article “Boosting pharma research”, published in Business Standard on 8th Feb 2023.
Syllabus Topic: GS Paper 3 – Industries and industrial policies
News: Government is going to introduce research-linked incentive (RLI) scheme for pharmaceutical sector, just like PLI scheme for other sectors.
Not much is clear about the scheme, but specific areas within the pharma sector — including antibiotics and biosimilars, could be the target areas.
What are the needs of boost to pharmaceutical sector?
Research and development (R&D) spending in the sector is too low.
In fact, multinational pharma companies operating in India are spending higher part of their domestic revenue on R & D than by Indian companies.
R & D is still not considered profitable by companies. Because they have not yet seen visible returns on any successful innovation in India.
What are things to be considered before launching the scheme?
If RLIs are linked to individual projects, then there will be a dilemma whether higher R&D will be achieved over time without unsustainable expenditure by the government.
A separate vertical for incentives for micro, small, and medium enterprises to invest in R&D cannot replace the need for access to basic science and cheap financing and human capital that allows such start-ups to flourish.
It would be difficult to identify sub-sectors within the pharma business that would be the most productive recipients of RLI.
