Early this month, the Centre has taken an important decision with regard to purchases of medicines by Central government departments, Central PSUs and other Central government bodies. With this decision, purchases of a list of 102 drugs and pharmaceuticals by these Central bodies, undertakings and departments should be from Central Public Sector Enterprises or their subsidiaries where CPSEs hold 51 per cent stake. The policy has clarified that for this purchase preference, the plants of these CPSEs should be complied with Schedule M norms as is applicable to the entire industry. In the event, pharma CPSEs are not forthcoming to supply these medicines, purchase departments of Central government bodies and departments are free to buy the products from other manufacturers. The purchase preference policy, directly favouring drug PSUs, is valid for a period of five years. The objective of the Central government is to clearly support the drug PSUs like IDPL and HAL as they are sick for some years and are desperately looking for government assistance to revive. The total purchases of Central government departments such as CGHS, Defence, Railways, ESIC, National Rural Health Mission, National Aids Conttrol Organization, etc. are estimated to be Rs 2,000 crore. The purchases of state governments account for another Rs 1,500 to Rs 2,000 crore per annum for their health programmes.
The government decision to provide an exclusive market for products of drug PSUs is not liked by the drug industry. IDMA and CIPI have made serious objection to the policy stating that the decision is very unfair. They demanded that such opportunities should be given to small and medium enterprises also as they have just invested heavily for complying with Schedule M requirements. This protest should be expected and they have a reason to complain. They may lose some business which they have been getting without much difficulty. It is true that a good number of them have spent a few lakhs of rupees to modernise their plants. But that was long overdue. What needs to be understood is that the government has a major social obligation of providing healthcare at reasonable prices to several millions of middle class people including its own workmen. The government institutions can neither depend on large private drug units for this as their products are quite expensive nor small drug units as quality of many of their products is doubtful. Therefore, there is nothing wrong in deciding to support drug PSUs as they have a definite space in country's pharma sector. The government's decision to revive all the five sick units of IDPL and HAL plants is significant. NIPER has been designated to function as the external consultant for the entire revival process. The total asset value of these five units of IDPL located at Hyderabad, Chennai, Gurgaon, Rishikesh and Muzaffarpur is estimated at over Rs 15,000 crore and some of these units have highly sophisticated plant and machinery to produce drugs at a low cost. HAL plants located at Pune also have huge assets with capacity to produce quality drugs at lower prices.