The Department of Pharmaceuticals (DoP) will take up the issue of drug procurement policies of various government departments like Indian Railways and ESIC which had increased the turnover criterion for medicine procurement, virtually disqualifying the small and medium pharma companies from participating in the tenders for supplying medicines to these departments. As per the new drug procurement policy of the Railways, drug companies with a turnover below Rs 50 crore cannot participate in the tenders.

According to sources, the DoP has agreed to take up the issue with these government departments to find an amicable solution to the issue. The DoP has asked the industry to furnish further details about the issue.

Ever since these government departments changed the drug procurement policy last year increasing the turnover criterion, the drug manufacturers, especially the small and medium drug manufacturers, were running from pillar to post to make the government see reason. The industry's repeated pleas in this regard were ignored by the concerned authorities.

IDMA in December last had sought the Competition Commission of India's intervention in the matter on the plea that the governments new high turnover criterion is not only against the avowed government policy of encouraging SME sector but is also against the principles of competition. The matter is still pending with the Commission.

The government agencies hiked the turnover criterion on the plea of ensuring quality of the medicines supplied to the hospitals across the country run by them. But the industry pleads that purchase of medicines based on annual turnover of companies would on its own never guarantee quality. Turnover alone cannot guarantee quality of medicines when many manufacturers get their products manufactured from different factories and on contract from small scale and medium scale units. Besides, the industry says that most of the small and medium companies in the country comply with strict GMP norms set by the regulatory authorities.

As per the new drug procurement policy announced by the Railways, drug companies with a turnover below Rs 50 crore cannot participate in the tenders. The companies having turnover from Rs 50 to Rs 150 crore can supply maximum 25 products. Those with turnover between Rs 151 crore and Rs 500 crore are eligible to supply upto 50 products. The companies with turnover from Rs 501 crore to Rs 1,000 crore can supply upto 75 products while those having turnover above the Rs 1,000 crore mark can supply all products.