Penicillin G is an essential antibiotic that is used in the production of several other antibiotics. India had phased out its production of penicillin G due to the arrival of cheaper Chinese products, which were heavily subsidized.
The Production Linked Incentive (PLI) scheme is a major initiative of 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, with the aim of reducing India's dependence 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 crore for manufacturing of 41 bulk drugs during the scheme period from 2020-21 to 2029-30.
Recently, Union Health Minister Dr Mansukh Mandaviya announced that India will resume 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 medicines such as antibiotics, enzymes and hormones, offering a progressive incentive structure over six years. This scheme has already demonstrated a positive impact in reducing API imports, marking a step towards greater self-sufficiency in India's pharmaceutical sector.
Listed below are the stocks that can benefit from the PLI scheme:
Aurobindo Pharma Ltd
With a market capitalization of Rs. 65,821 crore, Aurobindo Pharma Ltd shares 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 stock touched a high of Rs. 1,142, gaining around 2 percent and closed the day at Rs. 1,123 each.
Aurobindo Pharma Ltd has recently launched four manufacturing facilities in Andhra Pradesh, including a Penicillin G (Pen-G) plant, to boost self-sufficiency in the pharmaceutical sector.
The Pen-G plant is expected to begin trial production in April and commercial production in a couple of months, with the start of production during the second quarter of the current fiscal year.
Looking at the company's financial statements, revenue increased by 1.8 percent from Rs. 7,219 crore during the September quarter to Rs. 7,352 crore in the December quarter. Additionally, net profits increased by 25 per cent from Rs. 752 crores to Rs. 940 crore during the same period.
Torrent Farmacรฉutica Ltda
With a market capitalization of Rs. 87,238 crore, Torrent Pharmaceuticals shares 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 stock touched a high of Rs. 2,619.30, gaining around 3 percent and closed the day at Rs. 2,577 each.
Torrent Pharmaceuticals, a subsidiary of the Torrent Group, has been a major player in the Indian pharmaceutical industry. Pharma's Ahmedabad plant was the last to cease production of penicillin G, and the company will restart production in mid-2024.
Looking at the company's financial status, revenue increased by 2.7 percent from Rs. 2,660 crore during the September quarter to Rs. 2,732 crore in the December quarter. Additionally, net profits increased by around 15 per cent from Rs. 386 crore to Rs. 443 crore during the same period.
Written by Vaibhav Patil
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