An estimated 40% of the medium and small pharma units are at a high risk of shutting down business with the new good manufacturing practices (GMP) norms set to take effect from December-end for companies with an annual turnover of less than Rs 250 crore.
“There are around 10,500 manufacturing units in the country. Out of which, over 8,000 are medium, small and micro enterprises (MSMEs). It’s estimated that 30-40% of these units will likely shut down if the norms are enforced by the end of this year. Some units have already been closed down fearing that the norms will make them unviable,” said head of a pharma association on condition of anonymity.
Even though various pharma associations have asked for extension of the deadline citing challenges in implementing the norms, the government is yet to take a decision. “We have given presentations to CDSCO (Central Drugs Standard Control Organisation) to reconsider the deadline. They are currently reviewing it,” said Viranchi Shah, national president, Indian Drugs Manufacturers Association (IDMA).
Early this year, the government revised the GMP rules to bring them at par with the global standards. These rules ensure that the production of pharma products meet the globally acceptable quality standards. The revision was also aimed at upgrading the manufacturing practices so that they are in sync with the latest tech advancements. Since these upgradation require substantial investments and additional manpower, MSMEs are facing technical and financial challenges to implement them.
“We have requested the government to allow us to implement these upgradations in phases. We have asked for an extension for a minimum of one to two years as it involves infrastructure and system changes. We fear if the rules are enforced as planned, a large number of units could be out of business,” said Jatish Sheth, secretary general, Confederation of Indian Pharmaceutical Industry (CIPI).
Experts said that besides large investments required to improve the manufacturing and testing facilities, the companies will have to do rigorous documentation to ensure traceability of manufacturing and testing activities. “The key challenge is the documentation apart from the upgradation for which we require additional skilled manpower. While there’s a shortage of manpower in the industry, the bigger concern is the high attrition rate which stands at 25-30%,” said CIPI’s Sheth.
Meanwhile, the industry associations and the government are trying to safeguard MSMEs by running training programmes. “We are preparing the companies to be compliant. We have partnered with CDSCO to run a series of programmes across pharma hubs such as Hyderabad, Indore, Baddi, Daman and others. CDSCO is bringing experts while IDMA is getting companies to participate in the programmes. Additionally, we are working with several state drug controllers to provide technical assistance to manufacturers,” said Shah.
In March this year, the government had launched revamped pharmaceuticals technology upgradation assistance scheme (RPTUAS) that will financial incentive to Rs 2 crore for drug manufacturers to upgrade their technological capabilities. “Despite the government’s financial support, the money is not getting disbursed as fast as it should be,” said head of a pharma association quoted above.
Sources said that the primary concern of the government to extend the deadline is that it will benefit non-serious players who are not willing to upgrade. “We have requested CDSCO that there will be some players who are willing to upgrade but they don’t have the wherewithal to upgrade. So there’s a need to review the deadline for such companies,” said IDMA’s Shah.
Industry experts said that the new guidelines will differentiate serious companies from others. “The challenges of small and medium-sized manufacturers can be classified into four areas: funds, tech, skills and space. These companies need immediate investments for installing testing equipment, air handling systems, water systems, etc. Big pharma companies and contract manufacturers like us have been GMP compliant for a long time because we understand that there’s a demand for quality drugs,” said Sandeep Jain, managing director of Akums Drugs & Pharmaceuticals.