SSI pharma units to go global

Small-scale pharmaceutical manufaturers in the country are now looking at exports to the less-regulated markets and contract manufacturing from outside India as an option for survival.

The Confederation of Indian Pharmaceutical Industries (Cipi), the umbrella organisation of small-scale pharma associations from different states, and the China Pharmaceutical Manufacturers' Association (CPMA) will soon sign an MoU to explore joint ventures, contract manufacturing opportunities, joint research possibilities and technology transfer.

TS Jaishankar, chairman of Cipi, said the association was planning to enter into more tie-ups to help small-scale units survive in business.

The 6,000-odd SSI pharma units, which employ about 1 lakh people and with an annual production of about Rs 7,000 crore, were mainly surviving by working as loan licensee contract manufacturers for the major domestic companies and through government hospital supply orders.

About half of the units have either closed down their shops or migrated to the excise-free zones in Himachal Pradesh, Uttranchal and Jammu and Kashmir in the last two years.

The existing units are fighting for survival due to adverse policy initiatives such as mandatory Good Manufacturing Practice Standards (GMP) compliance and the price advantage enjoyed by units operating from the excise-free zones.

With majority of the major pharma companies setting up large units for domestic production in excise-free zones, job work manufacturing opportunities have dried up for small-scale players.

Cipi is planning a delegation to China for exploring opportunities in that country. It is also discussing with the Commerce Ministry's Pharmeceutical Exports Promotion Council (Pharmexcil) to avail incentives of the Market Development Access (MDA) scheme for its members. At present, major Indian companies source their active pharmaceutical ingredient (API) requirements through agents. The delegation will also explore the possibility of acting as suppliers to Indian pharma majors by roping in direct supply pacts with Chinese companies.

"Chinese manufacturers have huge manufacturing capacities but are far behind India in the field of drug disvovery and new drug delivery systems. More than 80 per cent of the hospital supplies in China are controlled by the US and European pharma companies. This is another area our units can to tap. Indian companies can also bring Chinese drugs to the domestic market depending upon their core competent areas of manufacturing," said Jaishankar.

S R Vaidya, vice-chairman of the Indian Drugs Manufacturers' Association (Idma) notes that the SSI manufacturers are looking at less-regulated markets in African countries for exporting drugs.

"Earlier, our small-scale units were not even thinking of drug exports. With the change in business enviornment, the smal-scale manufacturers also will have to explore export markets for survival as it will be difficult to survive only by depending on the domestic market. Exporters should have GMP-compliant manufacturing facilities" he said.

According to a recent official data, of 4,172 registered small-scale drug units in India, only 1,672 units have upgraded their facilities as per the GMP norms and 1,797 units are in the process of upgrading their facilities.