In a novel way to skirt the issue of price-controlled bulk drugs, the Gujarat state board of the Indian Drug Manufacturers' Association (IDMA) has iniatiated to form clusters and beat the burden of high prices of drugs. The move comes as a breather for the small and medium enterprise (SME) sector, which have to bear the high cost of drugs on individual purchases.
"The SMEs that buy individually and in less quantity are often at disadvantage as compared to the big players who purchase in bulk. Further, these SMEs have to sell the products at a competitive rate and can end up making heavy losses. In order to help these SMEs, we are planning to form clusters of 10 companies each and buy in bulk. It is an IDMA iniatiative in the form of a co-operative and will also have a constitution. This will help the companies distribute the costs and gains among themselves and improve quality of the products," said RS Joshi, executive secretary at IDMA, Gujarat board.
The Drug Price Control Order (DPCO) and National Pharmaceutical Pricing Authority (NPPA) control, fix and revise prices of certain schedulded drugs.
IDMA aims to reach out to various companies and form similar clusters in different cities of Gujarat. "Currently Gujarat has a market share of 48 per cent of the country's total pharma industry. If all the companies come together to form such a cluster the SME sector will benefit immensely and the state can garner up to 60 per cent of the pharma market in the country. Also, currently we see a capital utiisation of 80 per cent which can go up to 100 per cent if the government and regulatory authorities extend support," Joshi added.
The pharma industry seems to be in sync with the decision of the association to tackle the issue of price control and revision for the SME sector.
"The price control regulatory's policies do not allow full capacity utilisation for many pharma companies. If the government expects us to comply with stringent policies, how do we come out with quality products of international standards? The state government should also assist the industry and make drugs cheaper for small and medium companies as the industry is making losses currently, " said an official of Reliance Pharma.
According to another pharma company official, "We are not ready to compromise with our products. Recently, the purchase price for Vitamin A shot up from Rs 9 to Rs 12 and companies have decided to stall the production of the drug. It is not feasible to produce a drug when it has to be sold at a lower rate. The cluster will help tackle this issue effectively."
Besides, the SMEs are also facing the issue of funding in recent times, according to Joshi. "The central government had assigned Rs 600 crore to Small Industries development Bank of India (SIDBI), of which nothing has come to pharma companies yet. So, when the central government approached us for suggestions on the Pharmaceutical Technology Upgradation Fund it is planning to set up, we suggested that the money for the pharma sector be given to the fund instead of SIDBI, which can be disbursed to the industry with better interest subsidy," Joshi said.
