The pharmaceutical industry in India, contributing over 20% to the global medicine supply chain, has earned the country the title of the “pharmacy of the world.” However, a closer look reveals that the actual discovery of medicines in India is minimal, primarily due to the country’s modest investment in research and development (R&D). India allocates only about 5% of what the United States invests and a fifth of China’s investment in health research. The Standing Committee on Health’s 2022 report highlighted this significant disparity, with the US spending 2% of its GDP on health research compared to India’s mere 0.01%.
To address this gap and establish a robust R&D ecosystem, the Indian government introduced the Scheme for Promotion of Research and Innovation in the Pharmaceutical and Medical Technology Sector (PRIP) in the 2023-24 Budget. This scheme, backed by a substantial financial allocation of ₹5000 crore over five years, aims to promote collaborative research between established pharmaceutical companies and the National Institutes of Pharmaceutical Education and Research (NIPERs). It provides financial assistance to expedite the market launch and large-scale commercialization of products with significant potential.
Unlike the production-linked incentive (PLI) scheme, which focuses on manufacturing, PRIP is a financial support scheme with a unique risk and benefit-sharing model. The government becomes a participant in risk and benefit sharing, receiving returns in the form of royalties or equity in case of successful products and no returns in case of failure.
While PRIP holds the potential to revolutionize the pharmaceutical and medtech sector, its impact will be gradual over the next five years. Complementary factors such as IPR protection, availability of skilled researchers, international partnerships, tax incentives, and policy certainty are crucial to attract large pharmaceutical companies and foster a thriving innovation ecosystem. Additionally, giving preference to domestically developed products in government procurement decisions can further drive R&D within the country, making India a hub for pharmaceutical and medtech innovation.
