Secretary, Ministry of MSME on 10-1-2018 convened a meeting at “Samiksha” Room No 49, Ministry of MSME, Udyog Bhawan, Maulana Azad Road, New Delhi to discuss on “Challenges being faced by Indian Pharmaceuticals MSMEs in order to ensure continuity and augment supply to meet National & Global Public Health Goals”. Dr. Jaimin Vasa, President Gujarat Pharmaceutical Association and Gujarat Chemical Association given the presentation.
Following officials attended the meeting: Dr. Arun Kumar Panda, Secretary, Ministry of MSME, Shri Ram Mohan Mishra, AS & DC, O/o DC (MSME), Shri. Piyush Srivastava, ADC, O/o DC (MSME), Shri. Rajiv Aggarwal, Joint Secretary, Department of Industrial Policy & Promotion, Shri. D.N. Sahoo, Dy. Secretary, Ministry of Health, Ms. Barnali Khastgir, Under Secretary, Department of Pharmaceuticals, Dr. Manisha Shridhar, Regional Adviser, World Health Organization (WHO), Shri. A.K. Madan, Executive Director, Indian Drug Manufacturers’ Association, Shri. P.K. Gupta, Chairman, Confederation of Indian Pharmaceutical industries, Dr. Jaimin Vasa, President, Gujarat Pharmaceutical Association, Shri. R.L. Sharma, President, Karnal Pharmaceutical Manufacturers Association, Shri. R.K. Rai, Director (CD), O/o DC (MSME), Shri. C.S.S. Rao, Dy. Director (CD), O/o DC (MSME), Shri. R.K. Bharti, Dy. Director (Chemical), O/o DC (MSME).
Dr. Jaimin Vasa, President, Gujarat Pharmaceutical Association & Sr. Vice President, Gujarat Chamber of Commerce and Industry & President, Gujarat Chemical Association as well as member of Board of Advisors of Accuprec Research Labs gave presentation about Issues and Challenges faced by SMEs in Pharma Sector and Possible Remedies in the meeting. Some important point of the presentation:
Issues and Challenges
New regulations - BA-BE requirement, stability
Recently the government has issued GSR making it mandatory for all pharma formulation manufacturers to provide BA-BE for all products under BCS Class II and Class IV. While large companies have enough funds and capabilities, Due to the limited of Fund many MSME will move out of the Oral dosage forms.
The main issue raised by most of the pharma companies in MSME Sector is that Control of Drug Price because due to this Government reforms for the essential medicines SMEs have to lower the price of drugs. No doubt this has been done by the Government for the betterment of the public but the profits which SMEs earn are basically peanuts and this income is not sufficient enough.
Regulatory Aspects is the most important challenge comes from regulators in developed markets, which have imposed strictures on Indian exporters.
The approval of USFDA is important to export the goods tobecause the USA and other countries. To update the infrastructure for getting the USFDA approvalas well as Registrationprocedurerequired huge investment.Most of the Pharma Industries in MSME sector failing to adopt and comply with all these regulations due to Shortage of Funds.
Over Dependence on China for Raw Material like API, Excipients etc.
API manufacturing is highly polluting and till now the Indian pharma industry has relied on imports from China. Therefore, India is heavily dependent on China as the latter meets over 75% of India’s API (Active Pharmaceutical Ingredient) requirement and also more than 50% of India’s top 10 pharmaceutical company’s needs. Import of API from China is also required for close to 150 essential drugs as per the National List of Essential Medicines (NLEM). However, such dependence could have a disastrous effect on impacting overall production and profitability of Indian Pharma Industries in MSME Sector.
Competition in formulation – Bangladesh, China…
Now due to prohibition problem China have restricted the API & other intermediate. Therefore they have diverted their manufacturing activities for formulation. Also Bangladesh started formulation. This has caused big challenges for Indian SMEs in Pharma Formulation Sector.
Financial crunch – cost to compliance is high
Accessing adequate and timely financing on competitive terms, particularly longer tenure loans remains a big challenge for SMEs Pharma sector. Some of the major causes for low availability of bank finance to this sector are the high-risk perception, inadequate data and usage of external credit rating, weak corporate financial systems, early stage high transaction cost for small loans and high costs of the banks in lending to MSMEs. The lack of adequate collateral further hampers availability of funds to the sector.
Compliance to stringent Pollution control norms
Implementation of the Pollution Control is not that easy particularly for MSMEs considering the high cost involved in setting up pollution control systems for zero discharge and water treatment apart from installing mandatory online monitoring equipment for environmental pollution. This discouraging domestic API manufacturing and they are compelled to reduce the production activities and force to depend on Chinese imports.
Poor Academic – industry co-operations and skill deficit
The students who were passed out not know the industries requirement and industries not been able to hire them. At present the student who are passed out concerned stream not been able to operate even HPLC. Poor academic standard and syllabus are not as per the industries requirement.
Recommended Suggestions for Assistance:
1. Hand-holding to meet BA-BE requirements
Hand-holding to meet R&D issues related to Formulation development, technology transfer to comply with BA-BE norms, dossier preparation for exports, shorter route of synthesis, etc. In order to enable the MSME to survive, it is requested that MSME Ministry provide subsidy for creating Cluster – BA-BE testing centre that can in-turn provide low cost BA-BE testing facilities for the MSME pharma industry. Such a cluster would require a funding of about 10 Crore with balance investment from industry and cluster will be managed by industry association or industries. Also BA-BE Report is also very costly and time consuming. Such report should be available from NIPERs at subsidized cost for SME.
2. NIPERS, University can play important role. Academic Institutions as knowledge partner
Start more NIPERs and Provide Infrastructure and staff for the existing NIPERs and strengthen them. These NIPERs should support the SMEs by providing R& D as well as Regulatory Support with less cost.
With the Industry Institute interactions - various IITs and Universities enable act as a knowledge partner for SMEs in various fields. They can support SMEs through their various resources like Research & Development, Finished product Development and share the latest technological innovation
3. Incentives to generic drug manufacturers to combat low Margin due to price control
Many of the MSMEs require funds mostly for financing their short term working capital needs. The current bank rates are very high, which makes it difficult for the SME units to avail of the loan. It should be reasonably reduced. Many times the banks insist on credit rating report for granting loans to SMEs. For getting credit ratings, the firm requires to prepare project report in specified format. This skill many times is not available with the SMEs. Incentivizing SME Sector for development of new Drugs for diseases endemic
4. Financial assistance to SME to meet cost of Compliance:
Setting up of Pharma Venture Capital Fund for SMEs for innovations in drug discovery including incubator driven translational research. Also Schemes for Upgradation of SMEs for WHO‐GMP, USFDA/EDQM/ TGA and other International Standards accreditation by way of Soft loan or any other suitable schemes. Man Power Training of professionals for Up-gradation of SMEs as per WHO‐GMP & USFDA.
5. Start More and more API & Pharma Park for SMEs with centralized energy and pollution plants
Start more and more API Park & Pharma park for SMEs – With this SMEs can use the common facility like Common Effluent Treatment Plant, various Common facility like Steam for Drying etc. – so that the cost of production will be very low and environment problem will be sorted out. This will also help SMEs and Pharmaceutical Industries in General to avoid the over Dependence on China for API and other Pharma Raw materials. Also SMEs in Pharma Sector can compete the Chinese Manufactures qualitatively and competitively.
6. Role of SMEs in skill India
Present education system should be revamped according to industry perspective. Therefore there should be at least six months internship should be make compulsory in the curriculum.
7. Consortium for Pharma Industries in SME sector to combat competition
Government should promote a consortium of Pharma Industries in SME sector like Brazeel model. Now Government tender can apply only large industries due to the turnover clause and SME can’t apply for that due to their less turnover. If there is a consortium of industries they can apply for Government tender and the order will be distributed as per their strength and capacity of the individual members. Naturally the cost of the products will be less.
8. Marketing / distribution of drugs facilitation for SMEs
Instead of buying directly from manufacturers, Government should Set-up a distribution channel for procurement for hospitals or any institutions so that the manipulation in cost and quality can be avoided and controlled.
9. All approvals to Pharma though e governance like SUGAM (paperless)
Instead of ICEGATE (Indian Customs EDI Gateway) e-commerce portal of the Indian Customs, Government should introduce Sugam e-commerce Portal (Paperless) so that SMEs can update or know their product rejected or accepted.
10. DGFT approvals, import bills and export shipping bills clearance should be paperless
DGFT approvals, import bills and export shipping bills clearance is now taking more time and it should be paperless to save the time.
11. Fixation of Pric for Coronary Stents manufactured by SMEs
As per the Ministry of Chemicals and Fertilizers, Department of Pharmaceuticals, by notification dated 21st December 2016 has incorporated Coronary Stents at Schedule I of the Drug Prices Control Order, 2013 and Coronary Stents are ‘scheduled formulations’. Accordingly, NPPA fixed the ceiling price of Coronary Stents Rs.29,600/-. This has affected very badly on the profit margin of Coronary Stents manufactures in SME sector. But this benefit never reached the common man as envisaged by the Government, because the hospitals still charging the patient as before through various other charges like process charges, medicines etc.