Pharmaceutical contract manufacturing units in Karnataka are heading for a serious crisis with the finance ministry's decision to have MRP-based excise duty for drugs from January 8.

The units across the state have already received calls from their contract manufacture customers that they would stop production of many of the drugs. The customers of contract manufacture are now revaluating their future business orders as it is just not viable to continue the production of many of the drugs in the category of vitamins, antibiotics and painkillers.

The MRP-based excise duty is targeted only at the pharma sector while other industries are not included. The immediate step by the companies is to evaluate their business plan. Hence, meetings are held to chalk out the future course of action, stated V Madhusudan, executive vice president, Banner Pharmacaps India and president, (Elect), Indian Pharmaceutical Association-Karnataka.

The state pharmaceutical industry, which has a huge potential in undertaking contract manufacture, now stands to lose business orders worth many crore of rupees. Karnataka contributes 15 per cent of the total contract manufacture business in the country. The domestic business orders for every contract manufacturer in the state is now hit and the future is bleak for them, informed Madhusudan.

“We are shaken over the arbitrary move by the government. The notification was implemented with no prior consultation with the industry. What we see is that only the states of Himachal Pradesh and Uttaranchal had no excise duty and therefore only units in the state with a presence in Baddi in Himachal Pradesh will stand to gain," stated N Jatish Seth, secretary, Karnataka Drugs and Pharmaceutical Manufacturers Association.

Contract manufacture business caters to almost 90 per cent of revenue generation from medium-small scale in the state which have proved their quality production processes and adhered to stringent delivery timelines. Now we are not clear what would be the future course of action by many units for their survival, stated a section of industry sources.

The state's industry, under the Karnataka Drugs and Pharmaceutical Manufacturers Association and the North Karnataka Drugs and Pharmaceutical Manufacturers Association, have no choice but to go in for a day-long protest and support the call of the Confederation of Indian Pharmaceutical Industries (CIPI). While KDPMA is represented largely by the units from Bangalore, NKDPMA has representatives from the northern districts of the state includes Bidar, Gulbarga, Raichur, Bellary, Koppal, Bagalkot, Bijapur, Belgaum, Hubli and Dharwad. It has a total of 25 pharma units where a large number of them are in the small scale sector.