The Pharmaceutical Manufacturers' Association of Tamil Nadu (PMA), the state level body of formulation and bulk drug manufacturers, has urged the Department of Small Scale Industries (SSIs) under the Ministry of Commerce and Industry to consider all small scale units in the pharmaceutical industry for the recently announced investment limit hike.

The association demand is in the wake of the Ministry's decision to raise the investment ceiling of Rs. 1 crore to Rs. 5 crores for being classified as SSIs in case of 13 drugs including vitamins, antibiotics and paracetamol.

According to R Sethuraman, secretary, PMA, the Association had asked the same last year and it had represented that the investment hike for SSIs should be effected to the entire pharma segments. "The present notification does not serve any purpose since there are a large number of manufacturers in the three segments notified," he said.

The Ministry's decision follows a recommendation from the Department of Small Scale Industries, which observed that the export potential of these drugs could be aggressively exploited if more units manufacturing these drugs receive the benefits available to SSI units.

"The notification would have been advantageous for the SSI units in the pharmaceutical industry if it covered the entire industry. The representatives of the pharmaceutical industry had in a recent meeting conveyed that the new GMP regulations and the like will mean an increased investment cost. Accordingly, it was conveyed that the investment hike to be classified as a SSI be raised from the present Rs.1 crore to Rs. 5 crore for the entire industry.

The hike recommended was to ensure that the new rules and regulations are complied with and the increased input cost involved in the industry is compensated by way of raising the investment for the SSIs, said Sethuraman "Moreover, the investment hike of the current order is in fact not required for manufacture of vitamins, antibiotics and paracetamol as it is felt in other segments," he commented.

In the meanwhile industry sources claim that the notification is just a mean to let the existing manufacturers survive a little longer than expected. "The only benefit that accrues of the notification is that the existing manufacturers can continue with their operations for some more time. This apart, there is nothing in the notification that will really help SSIs take on competition or the challenges post WTO era," said an industry source.

"The demerits are more than the merits. What will eventually happen is that manufacturers of antibiotics, vitamins and paracetamol will continue to manufacture the products without looking much into marketing, brand building or product diversification. The MNCs are not going to enter into this segment anyway which means these manufacturers will have some more time to play before the game ends up for them, " said Suresh Kumar, Director- Marketing & Sales, Seaglad Pharmaceuticals.

Tamil Nadu abounds in manufacturers of formulations, including the above mentioned categories, mostly classified as SSI. A notification covering the entire pharmaceutical industry would have been a welcome move which would have surged the plunging bottomline and market share of these manufacturers, the Association officials said.