On January 01, 2019, the Government of India announced that the purchase preferences of pharmaceutical products for its Public Procurement Programme (PPO) will be given to local pharma products and local pharma suppliers. The preferences refer the percentage (%) of minimum local content in domestically produced drugs, which has been increased from 75% in the ongoing fiscal year to 90% for years 2023-25. Moreover, the percentage of minimum local content for all the pharma products which are not manufactured in India has also been increased from 10% in the ongoing fiscal year to 30% for years 2023-25.
The Department of Industrial Policy and Promotion (DIPP), Government of India, in year 2017, via PPO 2017, had declared that the purchase preferences would be given to domestically produced goods and services and also to domestic suppliers in all kinds of procurements undertaken by procuring authority. The declaration to encourage 'Make In India' campaign and promote manufacturing and production of goods and services in the country was well appreciated by local suppliers and manufacturers.1
Key points of revised Public Procurement Policy2: DIPP has identified Department of Pharmaceuticals (DoP) as the nodal department for implementing the provisions related to goods, services or works related to pharmaceutical sectors. Now, therefore, the DoP has notified that the purchase preference shall be provided by all government procuring entities to local supplier of pharmaceutical products as per the prescribed minimum local content and Phased Manufacturing Programme:
- For all the formulations which are
manufactured in India, minimum local content for all the pharma
products shall be as per the table below :
Pharma Products Minimum Local Content (%) 2018-19 2019-21 2021-23 2023-25 All Pharmaceutical formulations in different dosage forms 75 80 85 90 - For all the formulations which are
not manufactured in India, minimum local content for all the pharma
products shall be as per the table below:
Pharma Products Minimum Local Content (%) 2018-19 2019-21 2021-23 2023-25 All Pharmaceutical formulations in different dosage forms 10 15 20 30
The percentage of minimum local content is calculated by following formula:
Percentage of local content = (DoM-BoM) / (Total BoM)
×100
Where, Dom-BoM = Bill of material sourced from domestic
manufacturer, and Total-BoM = Total Bill of material
Note - The revised PPO order shall also be applicable to procurement of medicines made by State Government or PSUs under State Government or Local Bodies under Centrally Sponsored Schemes that are fully or partially funded by Government of India.
Conclusion
The Revised Public Procurement Policy order will create a huge opportunity for local pharmaceutical manufacturers and suppliers to show their potential and boost their own growth and country's economy as well. This amendment in the policy will help the economy of the country to grow. Further this will also help in affordable quality healthcare for all and boost indigenous pharma sector through 'Make in India' campaign.
Footnotes
1. https://dipp.gov.in/sites/default/files/PPP-MII-ORDER-2017_15062018_0.pdf
2. http://pharmaceuticals.gov.in/sites/default/files/PPO%20Revised_0.pdf
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