The Central government's Purchase Preference Policy (PPP), under which it purchases medicines from pharma Central Public Sector Enterprises (CPSEs), appears to have paid rich dividends to the ailing PSUs as they have registered good performances during the last fiscal.

As per the latest statistics available with the Chemicals Department, apart from the benevolent revival packages by the Centre, the government policy has proved to be a much-needed tonic for the ailing PSUs to pull them out of the red during the last financial year. Some of the PSUs also have reversed their fortunes.

The pharma PSUs have received orders worth Rs 250 crore during the year 2007-08 under the PPP against a meagre Rs 70 crore in the previous year, official sources said. However, compared to the huge volume of drug purchases made by the government, the earnings still fell short of expectations. The Central government departments reportedly buy drugs worth Rs 2000 crore a year while the orders by State government are worth another Rs 1500 crore for various healthcare programmes. However, the chemical department sources said they were looking for a realistic figure of Rs 300 crore a year to add to the growth of PSUS.

The Government had in July 2006 approved the proposal with regard to preferential purchase of 102 drugs/pharmaceuticals exclusively from pharma CPSUs and their subsidiaries by Departments, PSUs, and autonomous bodies at NPPA certified rates minus discount up to 35 per cent. Instructions in this regard were issued on August 6 that year, to help revival of sick Pharma PSUs.

Coupled with the revival packages, the scheme had paid off in improving the plight of the PSUs. The Indian Drugs and Pharmaceuticals Ltd is still waiting for the clearance of the revival scheme now under the scrutiny of the Group of Ministers. But all other PSUs like Hindustan Antibiotics Ltd (HAL), Rajasthan Drugs and Pharmaceuticals Ltd (RDPL), Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL) and Bengal Chemicals and Pharmaceuticals Ltd (BCPL) have improved the showing during the last fiscal.

Hindustan Antibiotics recorded a better production and sales turnover during the year. The turnover went up to Rs 105.81 crore during 2007-08 from Rs 49.22 crore in the previous year while production touched Rs 119.84 crore from Rs 48.96 crore during the same period.

The BPCL also was put on the revival path with a package and has registered higher growth. Hindustan Organic Chemicals Limited (HOCL), another PSU under the Chemicals Ministry, too has made a profit of Rs 17.04 crore during the year 2006-07 after the implementation of the revival package and the profit for the last financial year was also expected to be higher, as the final results were awaited, sources said.