In one of the biggest pharma R&D initiatives, the government has proposed to invest up to Rs 2,500 crore with a similar amount from private players for promoting innovation.
"Our focus will be on neglected diseases, for which developed countries are not investing enough till now," a senior government official told PTI.
The government is planning to mobilise an investment of more than one billion dollars in the next five years for promoting innovation here and half of this amount is expected to be contributed by the domestic pharmaceutical industry while the remaining would be provided by the Ministry of Chemicals and Fertilisers.
Private players would initially hesitate to make such large investments, so the government has decided to take the lead by investing around half the estimated budget initially for a period of two-three years, sources said.
The department has formulated the detailed programme and has sent it to the Prime Minister's Office for final approval.
Global consultancy firm Mckinsey has helped the department in formulating the entire programme on which the work would begin following Prime Minister's nod. The opinion of 15 private pharmaceutical companies was solicited before making any progress on the concept paper.
The programme aims at making India one of the top five global pharmaceutical innovation hubs by 2020.
As a part of the programme, the department proposed to undertake pro-active steps such as building infrastructure through public private partnership and offering financial incentives to encourage innovation in the drug development.
It would also be involved in shaping a favourable regulatory environment for promoting research in the sector.