The SME Committee of Indian Drug Manufacturer's Association (IDMA) has appealed to the Union Ministry of Chemicals and Fertilizers to reinstate exemption of the Small Scale Pharma companies from Drug Price Control Order (DPCO) in the New Drug Policy, a provision enjoyed by the SSIs in DPCO 1987.
In a letter to Ram Vilas Paswan, Minister for Chemicals and Fertilisers, the committee called for exemption of SSIs from Ceiling Price, and DPCO in the new policy. The letter said that the exemption would be helpful to provide the necessary support and encouragement, at a time when the SSIs have been under pressure due to the new patent era, MRP based excise duty and revised Schedule M.
The committee pointed out that the application of ceiling price based on the leading brands will not suit the SSIs as the purchase price of raw materials and packing materials are always higher due to low off-take of the products of small players and small batch size. This will increase the cost of production on account of higher yield loss, unutilized capacities of machinery and manpower.
It also suggested that while providing exemptions to SSIs, the government can carry on with the declarations to assure that the unit is not a subsidiary or owned or controlled in any manner by Non-SSI Company. The committee had also repeated its request for reduction of excise duty from 16 per cent to 8 per cent and enhancement of exemption limit for excise duty from Rupees One crore to Rupees Five crore.
"We intimated that the overall revenue leveraged by the government from the pharma sector would be depleted, as the major share of the companies migrate to the excise free zones and the SSIs face competition from units located in these zones," S V Veeramani, chairman-SME Committee, IDMA told Pharmabiz.
He added that the large number of SSIs have a major role in bringing down the drug prices through tough competition in the market place and are able to break the otherwise monopolistic situation. The committee opined that the ministry should address the role of SSIs in drug price control through exempting it from DPCO.