The SMEs are the backbone of Indian pharmaceutical sector in terms of number of units and employment contribution, and they are increasingly exposed to a different kind of competitive scenario unlike in the past. However, the government support especially in ensuring easy finances to them has been minimal, according to a study done for the DSIR.
The research study, released recently, says that though the SMEs contributed only one-fourth of value added of the total pharmaceutical sector, their role in providing accessible essential drugs in India has been admirable. As a result of policy liberalization, they have to meet a globalized competition largely driven by innovation of product and advertising, it says.
On behalf of the DSIR, the Institute for Studies in Industrial Development has done the study titled 'Defining the role of Government in trans-nationalisation efforts of Indian SMES: A case study of Indian Pharmaceutical Industry’ after extensive field research among the SMEs.
“Resource constraint SMEs, not only seek a strategic help from Government in strengthening their technological and skill base by training and R&D support, but also require preliminary help in foraying into international markets by the provision of market information including readily available list of overseas buyers, help in securing overseas product registration and plant approvals, etc,” the research says.
These firms are not capable of undertaking adequate technological and marketing activities to compete with domestic large players as well as foreign firms. They are also not able to enhance their export activities as a medium of enlarging their market focus. Indian pharmaceutical SMEs have witnessed a decline in export share in recent years as compared to large firms, a sign for major cause of worry. The export intensity of these firms has also declined in post-liberalized period (2001–02) as compared to pre-liberalized phase (1976–77), according to the paper.
Among the different recommendations, the study has asked the government to ensure adequate and low cost finance to SMEs for upgrading plants including GMP implementation, technology and getting approvals from overseas regulatory authorities. Strengthen access to national research laboratories, training Institutes and adequate facilities for testing laboratories for Indian pharmaceutical SMEs; allocate more resources towards MDA and MAI schemes for Indian pharmaceutical SMEs; maintain and regular update an online database on overseas distributors/buyers and provide access to SMEs at without any or at modest charges; organize regular awareness programmes on different government incentives through workshops at regional or local levels; organize training programmes to enhance SMEs’ understanding of basics of exporting strategy, procedures, and requirements of different overseas markets; formulate discriminatory rate of incentives for export performance to SMEs than large firms; promote small firms to link with large domestic as well as foreign firms to enhance outsourcing and job works; encourage the use of information technology by SMEs; promote pharmaceutical SMEs clusters; invest more in improving physical infrastructure, including road transport, ports; and take efforts to establish global recognition for Ayurveda as an alternative system of health care are among those suggestions.
One of the key suggestions is to launch a research programme jointly by government agencies, aimed at creating institutional capabilities on various aspects of exporting and to provide continuous technical support to SMEs through regular training and special workshops. This will include establishing a network of experts and institutions drawn from various relevant areas concerning export activities like export financing, insurance coverage, packaging, product registration, IPR management, shipment, etc. Institutional capacity building will also include developing of a training curriculum in exporting for SMEs. The selected experts will be drawn from the established Network who will harness the capability of SMEs in undertaking exporting by addressing various practical issues faced by them, as per the research held to facilitate the decision makers.