The tenders floated by the Tamil Nadu Medical Service Corporation (TNMSC), the nodal agency in the state for purchase of drugs and other essential stocks for government hospitals in the state, could help pharmaceutical companies in Tamil Nadu to tide over their financial crisis in the next financial year. Informed sources here say that it would help rake in revenue from a source they have never looked at in the last five years, and help arrest the declining revenue due to stiff competition.
The TNMSC is expected to float the bids in April for the financial year 2002-03. To what extent the companies in Tamil Nadu will benefit depends on the budget allocation to be announced by the state government in its annual budget to be placed in March this year. Last year the state had allocated Rs. 134 crore to the TNMSC in its budget.
Industry sources claim that a sizeable budget, even at the same level as that of last year, would help companies in the state to earn at least 10 to 30 per cent of the revenue targeted for the next financial year. "Though this may not seem big enough, the competition is sure to get more stiffer and in that context this figure would spell something good," said an industry source.
In the last financial year, companies in Tamil Nadu, have seen almost 25 to 30 per cent decline in their revenues. The declining revenue in the last five years has pushed most of the companies to the brink. With nationalized banks still to disburse loans without collateral security, companies have also been facing tough times in raising additional working capital.
The present state government had revoked in November last the government order (GO/75/97), passed by the previous government, that prevented TNMSC from purchasing medical and other stocks from pharmaceutical companies based in the state through the preferential purchase route fearing revenue loss.
Under the preferential purchase, prices of products purchased from pharmaceutical companies within the state would be lesser than those purchased from such companies in other states. Industry sources claim that this would help companies in the state bag sufficient orders due to the inherent price advantage they would have over the counterparts in other states which have bid at their expense.
Companies in Tamil Nadu have not participated in large numbers in the TNMSC bids for almost five years. By doing so, they had lost the chance of taking a share of the state annual budget that was allocated to the TNMSC for purchase of drugs and essential stocks. "The bids should help the companies in tiding over the recession and competitive markets," said a source in the Pharmaceutical Manufacturers' Association of Tamil Nadu (PMA).
What will further enthuse the companies in the state is the government's decision to do away with charging the pharmaceutical companies in the state the tender fees of Rs.5300 for bid tenders floated by TNMSC. This will give them the advantage since the tender fees will remain for companies located outside the state.