The Organisation of Pharmaceutical Manufacturers (OPM) of Andhra Pradesh at its meeting with the Andhra Pradesh Drug Control Administration (APDCA) appealed for arresting the migration of small scale formulation units from the state to other parts. The meeting was held to facilitate possible solution for various issues relating to the industry.
The government, if it desires to halt the shift of SSI formulation units to other states, should consider the implementation of 15 per cent price preference for state government purchases on the lines of Karnataka, Tamil Nadu and Kerala. The government should also consider purchasing 50 per cent of its drug requirements from local SSI units, the association said. According to OPM, currently there is absence of price preference in Andhra Pradesh.
The government should also consider the sales tax exemption for essential and life saving drugs as well as exempt SSI units from tax for government supplies. The association also made a point to declare the formulation activity in the state in GREEN category from present Orange category. Recently, there has been embarrassing situation for SSIs because of harassment by state pollution control board on the grounds of chemical processing, it said.
The 10 years excise exemption and five years income tax exemption in Himachal Pradesh, Uttaranchal and Jammu & Kashmir has caused disturbance a lot of distress amongst small formulation units in the state, which are losing business. This is also leading to closure of other auxiliary industries like printing, testing labs, packaging materials and other trading activities. The government should address the issue on a priority basis so as to save the local industry base, the association stated.
The MRP based excise duty in rest of the states has also created big disparity, sources at OPM said. The OPM has recommended the APDCA to consider reduction in the MRP based excise duty from 16 per cent to 8 per cent. It has asked for increasing the present abatement from 42.5 per cent to 70 per cent and also increases the SSI exemption limit form Rs 1.5 crore to Rs. 5 crore.
Reiterating its parent organisation's (CIPI) appeal to central government for special status to small formulation units, OPM urged the government to accord separate status for the progress of this particular sector which is different from other SSIs as well as bulk drug industry, and is also highly regulated and controlled through out the process, unlike other industry. It also stressed that products like multivitamins, paracetamol and some of the long life products should be left off the IP Law.
The association made a point that the SSI formulation units should be exempted from DPCO. As the current ceiling price is arrived on the cost structure of the big and MNC pharma companies wherein the manufacturing cost is comparatively less than that of SSIs. The cost of raw materials works out to just half for large companies as compared to the raw material cost of SSIs. In this case the units have no choice but to withdraw the manufacturing of products that are under DPCO. B-complex, anti-inflammatory, cough syrup, and other common products fall under DPCO and are also the major categories that the SSIs make.
The organisation felt that the concentration of maximum number of small formulation units in northern states is not advisable with respect to industrial security. Instead, equal and viable opportunities should be available in the other parts of the country for the growth of small formulation units.