The small-scale industries and formulation units have always been important aspects of pharmaceutical industry, playing a major role in the growth and development of the pharma sector in the state. In the recent years, the small-scale industries (SSI) have earned a name for itself as a provider of maximum number of employment. The small units have presence in all over the country and help the industry in a big way in manufacturing and marketing of the formulations.

With excise concessions in place, the multinational companies and big industries are depending more on SSIs for the manufacturing requirements. This trend is expected to continue in the future also. The small enterprise has been the backbone of Indian pharmaceutical industry.

owever, of late, the small-scale industries and formulation units are in a shambles as the policies of present government are not conducive for the growth and development of these sectors. Another stumbling block that obstructs the growth of small-scale formulation units is the tactic of big companies, who utilizes the available incentives as some of their units are covered under SSI definition, said V S Chakravarthi, vice president, Pharmaceutical Manufactures Organisation and managing director, Hi-Tech Pharmaceuticals Pvt. Ltd.

In the last couple of years, many a formulation company has fled Andhra Pradesh, largely lured by incentives and sops in other states. Hence, the closure and possible disappearance of small-scale industries in AP can be attributed to lack of sound incentives and sops. However, this has not affected the prices of drugs in the state, he said.

The stringent regulatory compliances like Schedule M and current good manufacturing practices (cGMP) also pose troubles for the small-scale industries. Some of the companies, who have stuck to Schedule M and cGMP, are finding it difficult to put in place various systems such as air handling system, re-designing, plant management etc., said Chakravarthi. Though most of the small-scale formulation units in the state have initiated improvement in their practices with respect to regulations, more than 20 per cent of units have shut down during last two years, he added.

Though small units appreciate the regulatory and general issues with regard to manufacturing, these companies do not have the wherewithal to compete in the international arena. Besides, banks do not provide loan for improvement of the units on collateral, Chakravarthi said.

If statistics are of any reliable information, the production of formulations in the state through contract or principle-to-principle arrangements has reduced to a pittance from nearly Rs 3000 crore in the past. As large-scale industries have created their own units or rely upon the migrated SSIs for the production of formulations, the state is finding it difficult to cope up with the situation. Even some of the medium level enterprises are getting their products manufactured through these migrated units, Chakravarthi said.

The preference for migrated SSIs has badly affected the prospect of the state, which used to manufacture for big companies, he added. If the present situation prevails, then the small-scale formulation units are sure to disappear from the pharmaceutical map of Andhra Pradesh, Chakravarthi noted.

Earlier, the formulation units in AP have presented their plight before the state government, demanding a 15 per cent price preference, a 50 per cent purchase preference and other required support to balance the abnormal atmosphere created by other states.

"It is good that the state government is talking about the special economic zone and other facilities. But, there are no takers from SSI formulation units to these facilities. The government should consider the small-scale formulation units as a separate entity and help them sustain the competition. If concrete action is not taken in time, Andhra Pradesh, the citadel of pharmaceutical industry, possibly has to forego its dominance in the pharma industry," said Chakravarthi.