India requires 75% local content in pharmaceuticals
India’s Department of Pharmaceuticals has announced measures, issued at the start of the year, specifying the ‘local content’ of pharmaceutical products is to be considered during the purchasing process.
The aim of the guidance is to encourage state governments and procuring entities to favour pharmaceutical products produced locally, as part of the government’s ‘Make in India’ initiative.
The document outlines that domestic pharmaceutical products must contain a minimum 75% local content during 2018-2019, which shall increase in stages to 90% by 2023-2025. For non-domestic products, the proportion will begin at 10% in 2018-2019 before rising to 30% in 2023-2025.
Explaining why this action is being taken, the document states: “[It] will promote manufacturing and production of goods and services in India with a view to enhancing income and employment.”
In addition, the Department of Industrial Policy & Promotion identified that the Department of Pharmaceuticals is the “nodal department for implementing the provisions.”
In order for those responsible for procurement to calculate local content for pharmaceutical formulations, the document stated that there should be a ‘bill of material’ sourced from domestic manufacturers and this can be weighed against the total bill of material involved in the production.
Each procuring entity will be required to constitute a committee for independent verification of the procurement process, ensuring it follows the government-specified guidelines.
The Indian pharmaceutical market is growing at a fast pace, predominantly through the production of generic medicine. The government’s action should boost demand for domestically produced ingredients and medicine, with this set to concordantly with increasing local content provisions over the coming years.
The guidance is in action immediately. It was not specified what action will be taken if these measures are not followed.
