22. In the above background, the Government have decided to modify the Drug Policy, 1986 as follows

22.1 Licensing

22.1.1 Industrial Licensing for all bulk drugs cleared by Drug Controller (India) and all their intermediates will be abolished, except in the cases of

• 5 identified bulk drugs which are to continue to be exclusively reserved for the Public Sector as mentioned in Para 22.3 below,
• bulk drugs produced by the use of recombinant DNA technology, and
• bulk drugs requiring in-vivo use of nucleic acids as the active principles.

22.1.2 Conditions stipulating mandatory supply of a percentage of bulk drug production to Non-associated Formulators will be abolished.

22.1.3 Licensing shall be abolished for formulations except in cases of specific cell/tissue targeted formulations.

22.1.4 Ratio parameters linking bulk drugs and formulations production and limiting the use of imported bulk drugs will stand abolished.

22.1.5 Broad-banding, Vocational restrictions and grant of COB licenses will be in accordance with the Industrial Policy.

(The Memorandum of Information prescribed by the Department of Industrial Development shall include an Addendum, to meet the additional requirement of the Drugs & Pharmaceuticals industry, as would be devised by the Department of Chemicals and Petrochemicals.)

22.2 Basic Stage Production

For achieving manufacture from the basic stages and arresting the regression towards manufacturing from later stage intermediates/penultimates, the tariff mechanism would be utilized. Imports of critical intermediates/penultimates may also be put in the negative list so as to arrest regression from basic stage manufacturing.

22.3 Review of Items Reserved for the Public Sector

Out of the fifteen drugs currently reserved, only five drugs namely Vitamin BI, Vitamin B2, Folic Acid, Tetracycline and Oxytetracycline, shall continue to be reserved for public sector units. The position will be reviewed after a period of three years.

22.4 Foreign Investment

22.4.1 Investment upto 51 per cent will be permitted in the case of all bulk drugs, their intermediates and formulations.

22.4.2 Investment above 51 per cent will be considered on a case by case basis in areas where investment is otherwise not forthcoming, particularly in the manufacture of bulk drugs from basic stages and their intermediates, and bulk drugs produced by the use of recombinant DNA technology as well as the specific cell tissue targeted formulations.

22.5 Foreign Technology Agreements

Automatic approval for foreign technology agreements shall be given in the case of all bulk drugs, their intermediates and formulations except those produced by the use of recombinant DNA technology, for which the existing procedure would continue.

22.6 Encouragement to Research & Development (R&D) Efforts

22.6.1 A new drug which has not been produced elsewhere, if developed through indigenous R&D would be put outside price control for a period of 10 years from the date of commercial production in favour of the Company who undertook the R&D.

22.6.2 The Department of Chemicals Petrochemicals would set up an Inter-Ministerial group to decide, within a set time frame, on measures to give further impetus to R&D in the Drug Sector.

22.6.3 The Ministry of Health and Family Welfare would further streamline the required procedures and steps for the quick evaluation and clearance of new drug applications, specially those developed through indigenous R&D.

22.7 Pricing

22..7.1 Single List of Price Controlled Drugs & “Mape”

The system of price control may be operated through a Single list of price controlled drugs and formulations based thereon with a MAPE of 100 per cent.