Small pharma companies in India are seen vulnerable to business loss going by the complex challenges they encounter including loss of contract production orders, hike in energy costs, rising inflation and growing debt.
In a phase of a dampened investment climate in India, the small pharma stated that they are getting adversely affected and fear if they would need to wind up businesses.
With over 80 per cent of the Indian pharma industry comprising of small players, the present scene is shaking the confidence of many units in the segment, observed experts from the Institute of Social and Economic Change, Bengaluru.
Describing the current scene as extremely turbulent, Harish K Jain, director, Embiotic Laboratories P Ltd. said that industry is facing multiple challenges simultaneously like high dollar rates, uncertain global environment, DPCO 2013(Drug Price Control Order), FDC (fixed dose combination) issues, land acquisition, crisis in Andhra Pradesh where most of the bulk drug units are located and hostile global regulatory environment.
Although the intent of the policies by the government of India can be appreciated, but the devil lies in the details. A small pharma enterprise like Embiotic was optimistic about steps like new DPCO and FDC which will create level playing field in the long run, but there are several issues that need to be ironed out.
According to M Chandrashekar, proprietor, Ce Chem Pharmaceuticals, the pharmaceutical space more so for the small players are facing hardships. The government has not bothered to address their concerns. The biggest blow is the increase in license fee for FDCs from the current Rs.300 to 15,000 per product. This makes survival difficult and future uncertain.
In these difficult times, small pharma players are having second thoughts in committing additional investment. This is because the pharma industry does not provide returns commensurate with investment and amount of knowledge spent. Moreover, the industry as a whole is labeled as a villain whereas it is not when it is engaged in yeoman service to the society. Some vested interests have crept in and has created a negative perception, pointed out a section of companies.
For companies that have been in the field for the over 25 years, plans are to diversify into non pharmaceuticals. We are also considering nutraceuticals and herbals but the regulatory environment is hazy here too. The last option would be to totally shut down the business and move to another area of trade, said Chandrashekar.
In this phase of business decline, there are small scale enterprises which are looking to re-examine their business plans “We need to work out novel innovative strategies in these circumstances. Take the challenges head on, create a positive environment walk a extra mile and convert the current crisis into a opportunity to pursue growth,” said Jain.