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Investment proposals from pharma industries under IEM route hits five year high in 2021
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Gireesh Babu, New Delhi
January 29 , 2022
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The investment intentions from the drugs and pharmaceutical industries have hit a five year high of Rs. 13,611 crore in 12 months of 2021, showing the industry sentiments towards growth in the near future. The medical and surgical instruments industry also proposed the highest investment in at least the last six years, during the year 2021, according to the data from the Central Government.
According to the data available with the Department for Promotion of Industry and Internal Trade (DPIIT), the value of 75 investment proposals submitted by the industries in terms of Industrial Entrepreneur Memorandum (IEMs) for the year ended December, 2021, was Rs. 13,611 crore, which is 84.5 per cent growth from the previous year’s Rs. 7,376 crore worth of IEMs. The number of IEMs was higher in 2020 at 77.
Interestingly, the year 2021 saw the highest in terms of investment proposals from the sector in a five year period from 2017. In 2016, a total of 103 IEMs were filed with investment proposals to the tune of Rs. 13,952 crore, which was 3.40 per cent of the total investment proposal value submitted across the more than 37 scheduled industries, during the year.
However, the following years saw a decline in investment interest by pharma companies, with Rs. 8,113 crore investment proposal (2.05 per cent of the overall investment proposals during the year) from 105 IEMs in 2017, Rs. 4,679 crore investment intentions (1.02%) from 91 IEMs in 2018, Rs. 5,195 crore (0.77) from 87 IEMs in 2019, and Rs. 7,376 crore (1.77%) from 77 IEMs in 2020.
It may be noted that the government has also announced various production linked incentive (PLI) schemes for bulk drugs, intermediates and formulations sector, in order to strengthen manufacturing in the country for self sustenance and to reduce dependence on China for many of the active ingredients and intermediates, in 2020 and 2021. The PLI schemes announced in 2021 were well received by the industry.
While the investment intentions in terms of actual numbers has gone up in 2021, it is in tune with the overall investment intention growth across various sectors as it is only 1.76 per cent of the overall investment intentions of Rs. 7,71,428 crore during the year.
Industrial undertakings exempted from the requirements of Industrial Licensing under the Industries (Development and Regulation) Act,1951 are required to file information relating to setting up of industries known as IEM (Industrial Entrepreneur Memorandum). All industrial undertakings exempted from the requirements of industrial licensing under I (D&R) Act, 1951 and having an investment in plant and machinery of Rs. 50 crore and above; and turnover of Rs. 250 crore and above, including existing units, new undertaking (NU) and new article (NA), may file an IEM, that is in Form IEM in the prescribed format 'Part A', according to the DPIIT.
All Industrial undertakings which had filed IEM are required to report commencement of commercial production and this is also filed on-line on the same portal by way of filing information as per prescribed form 'Part B' of the IEM after commencement of commercial production by the establishment.
The IEMs filed by the drugs and pharmaceutical industry during the month of December include investment by Divi’s Laboratories, Telengana, to manufacture Naproxen and Syngene International Ltd for research and development services in medicinal chemistry.
During the month, Thane-based Rubicon Research Pvt Ltd has submitted the Part B of the IEM, which indicates the commencement of commercial production for pharmaceutical products in its facility.
Interestingly, in the year in which there were several initiatives to streamline the medical devices sector, the medical and surgical instruments sector has seen the highest in terms of investment proposals at Rs. 556 crore in nine IEMs, compared to Rs. 467 crore in nine IEMs in the last year. The investment proposal during 2021 was the highest at least from the year 2016, according to the data available.
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