Karnataka’s small and medium enterprises (SMEs) are working to move up the value chain as regulated markets including the US pose challenges to attract contract manufacturing business.
The state is a recognised destination of quality manufacturing. “This is evident from the fact that most of the international and large Indian companies outsource their manufacturing to SMEs in Karnataka. Many of India’s top brands are made here in Karnataka,” said Sunil Attavar, president, Karnataka Drugs and Pharmaceutical Manufacturers Association (KDPMA).
According to Jatish N Sheth, past president KDPMA and director Srushti Pharmaceuticals, the industry must capitalize on the Make in India programme to maximise the advantage of its high quality trained manpower and prove that we can manufacture at a much more economical cost. In the case of adopting new technology, government has to play a major role to provide the required funds to the SME sector to be able to invest. Now the issue is that raw materials for pharma manufacture like the APIs and intermediates need to be imported and this comes at a high cost.
The big challenge for the SME pharma would be to retain what they have. The sector should aim at growth and move to the next level of the value chain. With contract manufacturing not being a viable model for revenue generation, SMEs will need to look at exports into the semi and un-regulated markets and scout for tie-ups in marketing, technology transfer and product development, said Jatish.
“The paucity of capital is a problem and this is where we look at constant flow of funds from the government which needs to happen because SME is the backbone of the pharma industry and it needs to be nurtured and not neglected,” he added.
“The state government should now focus on a three-pronged strategy to help the small and medium enterprises. First is to support the companies to upgrade units to global standards. The second is to focus on skills development. The third is to do away with VAT & excise duty on unbranded NLEM products,” said Harish K Jain, secretary, KDPMA and director, Embiotic Laboratories.
For Suresh Khanna, past president KDPMA and chairman, Stabicon Life Sciences, consistency and uniformity of laws would help the segment. Proposed new GMP guidelines in line with international norms, on one side and rigid price controls are the two major challenges for future investments. This is where innovation must be rewarded in some way so that the industry can strive to bring in new products and drug delivery devices into the Indian market.