With no upgradation plan, several small drug companies may shut operations
New Delhi: Thousands of
pharmaceutical companies
in the micro, small and medium enterprise (MSME) sector face the grim prospect of closure, having passed the May-end deadline for submitting plans to the government for upgrading their manufacturing facilities.
Only a fraction of such units, 1,700 out of an estimated 6,000, have submitted plans for upgradation as per the newly-notified
Good Manufacturing Practices
(
GMP
), people in the know told ET.
Industry executives said they anticipate many units to shut down and thousands of job losses as these units struggle with high costs needed to make the necessary infrastructure improvements. The government, meanwhile, is likely to initiate site audits and kick-off regulatory action against those not complying with the new standards, the people said.
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Experts noted that if the government takes stringent action, it may cause
drug shortages
in areas like cancer, where there are fewer manufacturing units.
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"Next few months will see a lot of small sector units getting closed, resulting in increased unemployment. The upgradation requirement to Schedule M has created challenges for small and medium units potentially leading to closures and unemployment," said an industry executive, raising concerns about the future of these units.
Some executives believe that 'stop production notices' will be issued to units not complying with the newly-notified standards, which may inflate drug prices. "These units require hand holding by the government and if they do not get further support, then production will stop, resulting in escalation of drug prices," a second executive said.
Health ministry officials however stressed that sufficient time has been given to the industry for complying with the new norms.
Earlier the ministry had received several representations from pharma associations with annual revenues of less than '250 crore for extension of timeline for the implementation of revised Schedule M. Schedule M of the Drugs and Cosmetics Act outlines quality standards for pharma products.
To address their concerns, in February, the ministry issued another notification for extension of implementation of revised Schedule M whereby manufacturers with less than Rs 250 crore revenues were required to file an application to the
Central License Approving Authority
within three months, along with the plan of upgradation.
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