Penicillin G is an essential antibiotic used in the production of several other antibiotics. India had phased out its production of Penicillin G due to the influx of cheaper Chinese products, which were heavily subsidised.
The Production Linked Incentive (PLI) scheme is a significant initiative by the Indian government to boost domestic manufacturing of active pharmaceutical ingredients (APIs), including penicillin G.
This scheme was announced in 2021 to support crucial fermentation products, aiming to reduce India’s dependency on China for these raw materials. The PLI scheme offers incentives to companies based on incremental sales, with a total outlay of Rs 6,940 crores for the manufacturing of 41 bulk drugs during the tenure of the scheme from 2020-21 to 2029-30.
Recently, Dr Mansukh Mandaviya, Union Minister Union health minister, announced that India will resume the manufacturing of Penicillin G, a common antibiotic that was last produced in the country in the late 1980s.
The PLI scheme is designed to support fermentation-based bulk drugs like antibiotics, enzymes, and hormones, offering a progressive incentive structure over six years. This scheme has already demonstrated a positive impact on reducing API imports, marking a step toward enhanced self-sufficiency in India’s pharmaceutical sector.
Listed below are stocks that may benefit from the PLI scheme:
Aurobindo Pharma Ltd
With a market capitalization of Rs. 65,821 crores, the shares of Aurobindo Pharma Ltd started Friday’s trading session on a flatter note at Rs. 1,123 compared to its previous close of Rs. 1,123.60. During the trading session, the shares hit a high of Rs. 1,142, gaining around 2 percent and closed the day at Rs. 1,123 apiece.
Aurobindo Pharma Ltd has recently commissioned four manufacturing facilities in Andhra Pradesh, including a Penicillin G (Pen-G) plant, to boost self-reliance in the pharmaceutical sector.
The Pen-G plant is expected to commence trial production in April and commercial production in a couple of months, with the starting of production during the second quarter of the current fiscal.
Looking at the company’s financial statements, the revenue increased by 1.8 percent from Rs. 7,219 crores during the September quarter to Rs. 7,352 crores in the December quarter. In addition, the net profits zoomed by 25 percent from Rs. 752 crores to Rs. 940 crores during the same period.
Torrent Pharmaceuticals Ltd
With a market capitalization of Rs. 87,238 crores, the shares of Torrent Pharmaceuticals started Friday’s trading session on a higher note at Rs. 2,544.10 compared to its previous close of Rs. 2,537.55. During the trading session, the shares hit a high of Rs. 2,619.30, gaining around 3 percent and closed the day at Rs. 2,577 apiece.
Torrent Pharmaceuticals, a subsidiary of the Torrent Group, has been a significant player in the Indian pharmaceutical industry. Pharma’s plant in Ahmedabad was the last to cease production of Penicillin G, and the company is set to restart production by mid-2024.
Coming onto the company’s financial statement, the revenue increased by 2.7 percent from Rs. 2,660 crores during the September quarter to Rs. 2,732 crores in the December quarter. In addition, the net profits zoomed by around 15 percent from Rs. 386 crores to Rs. 443 crores during the same period.
Written By Vaibhav Patil
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