The small scale pharma manufacturing companies in Kerala, majority of them are depending on government supplies for survival, may be forced to cut off supplies to the state medical services corporation (KMSCL) with the latter not having cleared the payment dues of around Rs. 10 crore to the manufacturers.

A team of manufacturers, led by their association (KPMA) leaders, called on the state health minister and wanted to speed up the payment process to save the units from financial crisis, and to prevent the possibility of medicine shortage in government healthcare institutions. It is estimated that outstanding dues of the MSME units ranges from a low of Rs. 15 lakh to as high as Rs. 283 lakh. Total dues as on 27.8.2014 is Rs. 985.78 lakh. Out of this, Rs. 220.12 lakh are overdue for supplies made during 2013- 14, according to the memorandum given to the health minister.

After meeting the minister, the president of KPMA, Parameswaran Namboodiri, said the state medical services corporation has not released any payment to any of the manufacturers during the past four months for the supplies they made in 2013-14. The association’s repeated requests to the managing director of KMSCL remain ignored always. It is said that the deliberate delay in making payments is a violation of the provisions of MSME Development Act, according to which the MSME units are eligible for payment within 45 days against supplies made to the government. The notification in this regard had come in the union government gazette on 16.06.2006.

Adding to the credit crunch faced by the industry, the procurement policy adopted by the medical services corporation is also against the growth of the small scale units. The units are given only a short period for delivery and insisting them that test certificates from accredited laboratories should be attached with the supply. This policy of the KMSCL puts the industrial units into a quandary as there is no accredited lab in Kerala.

KPMA informed the health minister that if urgent steps were not taken to save the sinking units, they would be unable to execute the second phase of orders made for 2014-15. The units are forced to take the extreme steps because of heavy interest on bank borrowings they made in order to effect the supplies. In addition to this, the units are burdened with heavy penalties for delayed supply and black listing for non-supply. The association informed the government that unless some positive steps are initiated, majority of the units will have to be closed down.

Because of the unfriendly industrial policy of the government, the number of pharma manufacturing companies in Kerala has come down to 32 from 97 in 1995.