The pharmaceutical manufacturers in Tamil Nadu will shortly approach the government for a second time seeking review of the tender conditions set by the State Medical Services Corporation (TNMSC) for supply of medicines to the government hospitals.
In January last year, TN PMA and IDMA TN branch submitted a joint representation to the government raising the same demand, followed by it, the health secretary called a meeting of manufacturers to resolve their problems. But the demands in the joint petition were not considered and the conditions still persist as they are, said an industry source.
According to the source, the tender conditions are not in favour of the small scale pharma manufacturing units and no business is getting to the industry from the Corporation side. They complain that they are unable to win the tenders of medicine supply issued by TNMSC because of the rigid norms.
“Not even five percent of the business is coming to the industry from the state medical service corporation. The main reason is the rigid tender conditions put forward by the government. Instead of supporting SSIs in the state, the Corporation is procuring medicines from companies outside of Tamil Nadu. There are 450 manufacturing companies in Tamil Nadu. Majority of them cannot participate in the tenders due to the punishment system adopted by the Corporation, mainly the system of ‘liquidated damages’ (LD), said an industry association leader.
As per the existing policy, TNMSC is charging liquidated damages at a rate of 20 per cent value of unsupplied quantity for 61-90 days, and above 100 days, it is charged at 30 per cent. Industry sources say that their members supplying to TNMSC are losing money because of the impracticable liquidation damages system. They want the government to raise the period calculated for charging liquidated damages of 0.5 per cent from per day to per week.
Another allegation is that TNMSC is giving the major portion of the total requirement of medicines to companies from other states. According to them all other states in the country place the full quantity order with their own manufacturers, and only for those drugs which are not available with them are outsourced.
The association leader further said due to several problems, many of the small scale manufacturers are unable to buy the raw materials required for the order in advance. Even during price fluctuation, they are unable to procure the raw materials. Therefore, they are unable to supply on time. The situation will attract the punishment of LD. The manufacturer/supplier has to bear a loss of .5% of the pending value as liquidated damages each day. This has to be reviewed.
He said one manufacturer had to pay Rs. 65 lakh towards penalty under this clause. At last the company had to close down. So, government should review the tender conditions in favour of the industry. “So far the government has not considered the joint representation given by TN PMA and IDMA TN branch”, he told Pharmabiz.