Drug manufacturing is a complicated process involving compounds and materials that, if used incorrectly, can be hazardous to health. Poor quality drugs, manufacturing processes or conditions can have dire consequences on human body. Hence highly regulated nations who have realised the necessity have already developed strict guidelines governing these processes to protect patients and ensure product safety, quality and efficacy.
"Good Manufacturing Practice" or "GMP" is a term that is recognized worldwide for the control and management of manufacturing and quality control of foods, pharmaceutical products, and medical devices. GMPs are guidelines that outline the aspects of production that would affect the quality of a product. Many countries have legislated that pharmaceutical and medical device companies must follow GMP procedures, and have created their own GMP guidelines that correspond with their legislation.
GMP's are enforced in the United States by the US FDA, under Section 501(B) of the 1938 Food, Drug, and Cosmetic Act (21USC351). The regulations use the phrase "current good manufacturing practices" (cGMP) to describe these guidelines. By June 2010, the same cGMP requirements will apply to all manufacture of dietary supplements.
The risks to the general public imposed by poorly regulated or manufactured drugs make the need for global adoption and adherence to GMP of paramount importance. In countries that enforce GMP the penalties for non-adherence includes forcing worldwide product recalls, seizure of property, large fines, even imprisonment.
Despite the initial hiccups in the implementation of the revised norms for GMP in the country, the Indian pharmaceutical companies are now aggressively embracing the standards set by the drug regulatory authority. More companies are hastening their upgradation process to comply with the standardised norms under revised Schedule M and an increase in number of companies getting GMP certification from the state drug control offices throughout the country.
However as the industry is gearing up to be GMP compliant , a number of issues have cropped up which will impact the prospects of especially the small and medium pharma units in the country. Their problems started with the implementation of GMP as per the amended norms of Schedule M of the Drugs & Cosmetics Act in 2005.
This new change in drug manufacturing practices was required as several small drug manufacturing units have been producing medicines in a dismal environment for several years. An inevitable outcome of the enforcement of the GMP norms was the closure of thousands of SSIs since 2005 as many of them refused to modify their manufacturing practices. More units are likely down shutters as their operations are increasingly becoming unviable. The profitability of these units is not that attractive and the credit availability to them is restricted as the banks and other funding agencies do not lend them that easily.
One of the main reasons why the SMEs are not able to comply with Schedule M norms is their perennial financial problems. The anomalous fiscal policies coincided with implementation of Schedule M which mandated upgradation at an enormous cost . Schedule M has escalated the cost of setting up a moderate sized SME unit to Rs 20 crore. Hence no new SME units have come up in the last three years except in excise free zones, simply because they are becoming unviable. An SME entrepreneur cannot repay loans given the small turnover of his business. The proposed implementation of Spurious Drugs Act in its present form has added to the woes of SMEs. Hencee the number of pharma SMEs has reduced drastically.
Most of the SMEs are also not getting due share of tender business of various government agencies and establishments. The government tenders for purchases of medicines are usually being cornered by large companies and MNCs.
In order to mitigate the sufferings of the small units,the Department of Pharma has assured the industry to facilitate more 'liberal funds' especially for the small and medium sector in upgrading them and be competitive in the domestic as well as international markets.The department authorities, on a mission to popularize the newly-revised Credit Linked Capital Subsidy Scheme (CLCSS), however has asked the pharma firms to fully utilize the available Rs 400 crore under the scheme first. Once these funds were utilized, the department would help facilitating more liberal funds, they have assured the industry.
The department officials in association with the Ministry of Micro, Small and Medium Enterprises (MSME) is launching a scheme for schedule M compliance of SSIs as an extension of the existing CLCSS. The Scheme is offering financial assistance to an expanded list of 179 products to support the SSIs to comply with the revised good manufacturing practice standards.
The MSME officials have already started meeting the pharma units across the country to brief about the revised guidelines of the CLCSS and exhorting them to make use of the opportunity.
The ministry, along with the drug regulator, has started conducting awareness building workshops in collaboration with the industry organisations in 10 SSI clusters since the beginning of October, 2009. SPIC is hosting five of the nine seminars while other associations like CIPI and IDMA are also being associated in other places.
The aim of the workshops are to spread awareness and deepen the understanding of Pharma SSI manufacturers about the implementation of the scheme involving the expanded list of 179 machinery and equipment required for Schedule 'M' compliance.
Even as SMEs are facing a crisis of their existence, large Indian pharmaceutical companies are being taken over by the powerful MNCs. The trend started with the acquisition of Ranbaxy, India's largest pharmaceutical company by Daiichi, the Japanese giant. There are reports of possible sales of the controlling stakes in Cipla and Dr. Reddy's Labs and Piramal Healthcare to some other MNCs. Poor performance of top Indian pharmaceutical companies during last two years and utter failure in the new drug research front have weakened these companies further.
With the amendment of Indian Patent Act in 2005 allowing product patent, Indian pharmaceutical market has become very attractive to MNCs. This had given a clear advantage to international companies to launch expensive drugs in the Indian market. MNCs have thus launched several costly drugs in the country since then as there is no price control on patented drugs. Huge profits from the sales of patented drugs during the last three years have emboldened the MNCs to take the next step of controlling the pharmaceutical market of India.
The strategy of raising the parent holdings in the Indian subsidiaries and acquiring major domestic companies is all part of the new agenda of MNCs. With possible sell out of large Indian companies to MNCs and weakening of SME sector, India may face the threat of high drug prices and domination of the domestic pharmaceutical market by the MNCs once again. This is a situation the Central government has to avoid at any cost to save the public from fleecing by the international pharma companies. And that can be done only by empowering the SMEs with whatever policy support the government can offer.
Policy initiatives are essential for the survival of the pharma SMEs in India as more than 5000 pharma SMEs have suffered during the last five years owing to anomalous fiscal policies which have been justified by DOR after levy of MRP excise in 2005. These anomalies were first pointed out by the Dr Pronab Sen Committee and then by the EAC of PMO Recommendations of EAC were even approved by the PM but never implemented by DOR, for reasons best known to it. If SMEs are not protected, it will be equivalent to handing over the entire local market worth Rs 50,000 crore to MNCs. Here it is pertinent to point out the fact that prior to advent of SMEs in 1960, prices of medicines in India were highest in the world.At present pharma exports are worth Rs 40,000 crore. If SMEs are not protected, all chances are that this will be taken over by China, which produces lowest price APIs. Needless to say, India itself handed over the initiative to China earlier in API production owing to its parochial policies. It is high time the country realizes the grim situation and comes to the rescue of its 5000 pharma SMEs which are already struggling to survive the burden of numerous policy changes which had impacted their fortunes.