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Schedule M compliance: Small units find the going tough
Our Bureau, Hyderabad | Thursday, August 21, 2003, 08:00 Hrs  [IST]

New regulatory requirements in the pharmaceutical industry under harmonization globally bring about borderless trade opportunities. These new requirements will allow Indian pharmaceutical companies to expand from non-regulated to regulated markets. This change also will bring about new outsourcing opportunities both in generic and branded products for the regulated markets. The International Conference on Harmonisation (ICH) guidelines, though a main hurdle, can nevertheless be used as a launching pad for the growth of the Indian pharmaceutical industry. ICH guidelines will not only bring about a lot of pains but also profits if followed properly.

In order to prepare the pharma companies to meet the challenges of post-2005, the Ministry of Health and Family Welfare, Government of India, has made compliance with Schedule M of the Drugs and Cosmetic Act mandatory for all the manufacturing units. The government has set December 31, 2003, as the deadline for the companies to evolve good manufacturing practices (GMP) and fulfil all the requirements of premises, plant and equipment for pharmaceutical products. In a 100-page guidelines, the government notification asks all the companies, " To achieve the objectives, each licensee shall evolve appropriate methodology, systems and procedures which shall be documented and maintained for inspection and reference, and the manufacturing premises shall be used exclusively for drugs and no other manufacturing activity shall be undertaken therein."

While most of the large and medium pharma companies are restructuring and upgrading their facilities not only to comply with Schedule M but also to international standards, small units do not have the resources to implement the Schedule M stipulations.

Companies like Dr Reddy's, Aurobindo Pharma, Natco Labs, Divi's Labs, Biological E Ltd and Suven Pharmaceuticals have world-class manufacturing and contract research facilities, while most of the large and medium units are modernising their facilities.

According to Subba Rao, Secretary, BDMA, most of the large and medium pharma companies have already modernised their plants to conform to Schedule M and other international standards. It was in their own interest to improve the units and introduce quality standards in order to meet customer requirements and to survive in business after 2005. Small units that cannot afford the expenses for renovation will find the going tough. Such units may have to go in for merger or strategic alliances with big Indian and foreign companies or face the inevitable closure.

Asked about the role of BDMA in implementing the Schedule M requirements, Subba Rao said there was not much the BDMA could do. It was for the individual units to realise the importance and carry out reforms. BDMA, was, however, making them aware about the requirements. He said when the patent regime would come into force in 2005, it would offer equal opportunities along with the challenges.

He said there would be more and more licensing of patents by the patent holders to Indian companies.

Dr P Koteswara Rao, president, Organisation of Pharmaceutical Manufacturers (OPM), representing the formulations section, mainly the SME units, said the immediate concern of the industry was to gear up in order to compete in the world market. This meant capacity and quality upgradation.

Though it was a welcome move, it had raised problems for most of the formulators who were essentially in the small-scale sector. By the definition of SSI, their assets were expected to be below Rs1crore. Then how could they invest a huge amount for developing a modern facility with world-class GMP, he asked.

OPM, therefore, wanted the government to extend the time limit beyond December 2003 and also approached SIDBI to provide long-term financial assistance at concessional rates to facilitate the small manufacturers to modernise their plants.

According to Venkat Reddy, Director, Drug Control Administration, the department is so understaffed that it will be difficult for its officers to physically verify the manufacturing units or exercise any kind of quality control in the real sense of the term. Though there is time till December and most of the units are undertaking reforms, he has appealed the manufacturing units and their associations to exercise self- discipline or regulation so that the work of the DCA officials will be minimised.

The regulatory authorities can pressurise only the licensed units. What about the unlicensed drug manufacturers? According to Venkat Jasti, president, BDMA, when the DCA officials apply the quality control measures, they actually end up harassing the genuine manufacturer on 'drugs not of standard quality,' instead of getting any closer to containing the counterfeit market. With profit margin, at times as high as 90 %, the unscrupulous operators make the most of it by operating without licences, making for a law and order issue beyond the purview of a regulatory authority.

Says Jasti, " To begin with what we need is a separate cell with a one track agenda of identifying such unscrupulous operators and bringing them to book, not just to escape with some minor fines running into a couple of thousands of rupees, but to be awarded severe punishments, including jail terms. Secondly, a close watch should be kept on the registered manufacturers to ensure that they are manufacturing only what they have been licensed to and are not indulging in any unethical practices. Thirdly, and most importantly, it is the role of the pharmacies. In our country, almost anybody and everybody can open and man a pharmacy without a registered pharmacist. Consequently, some stock and sell medication closely resembling branded medicines as they suspect little when a dealer comes with an offer of the same medicine fetching him a greater margin."

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