Sub-Working Group on Regulatory Issues For the 12 th Plan (2012-17)

The Terms of Reference of the Sub-Group on Regulatory Issues in the Pharmaceutical

Industry for the 12th Plan 2012-17 issued vide OM No. 35022/16/2011-PI.III dated

23.5.2011 (Annex-1) are:

i. To review the present status of WHO-GMP (World Health Organization – Good

Manufacturing Practice) certification and schedule-M compliance and suggest

measures for raising the level of compliance by manufacturers of drugs and

pharmaceutical products in the country.

ii. To assess the adequacy and relevance of present regulatory mechanism of drug

and pharmaceuticals sector and examine need for further strengthening to tackle the

menace of spurious drugs etc. and examine need for an apex authority to control

price, quality and supply of drugs.

iii. To indicate the milestones to be achieved in the 12 th Plan in the context of long

term goals as per item-I of the ToR (By Planning Commission) and recommend

programmes/schemes/measures that are to be initiated, continued or discontinued in

the 12th Plan period and estimated fund requirement.

iv. To make any other recommendations as may be appropriate for sustained

growth and competitiveness of the sector.

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The Sub Group had the following as its members:

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A number of other Members were co-opted as per requirement. These were:

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The Sub Group held four meetings on 9.6.2011, 17.6.2011, 28.6.2011 and 18.7.2011.

Minutes of the meetings are at Annex-II. The Sub Group meetings took into account the

recommendations of the 11th Plan (Annex-III) and their implementation status. Based on

these, further discussions took place on the Terms of Reference for the 12 th Plan. The

issues for the 12th Plan for this Sub Group broadly fall into two categories namely for

domestic production and for exports. Additionally regulations also concern new drug

testing regulatory requirement, nutraceuticals, veterinary and plant medicine, bio

pharma drugs. Within these, the Sub Group focused on reviewing the present status of

WHO–GMP certification including Schedule M compliance as also to assess adequacy

and relevance of present regulatory mechanism of drugs and pharmaceutical sector. It

is mandated to make recommendations to tackle menace of spurious drugs etc. and to

examine need for an apex authority to control price, quality and supply of drugs. Issues

relating to statutory provision for incentivizing research & development of generic and

new drugs were also discussed.

At the outset, the Sub-Group noted that presently total production of drugs in the

country is about US $ 20 billion. DoP is targeting to grow the industry to US $ 100 billion

by 2020. Given the estimated contribution of 30-40% by the SME sector1, the

production contribution would need to increase from an estimated value of about US $ 8

Bn to US $ 40 Bn by 2020. Thus, a five-fold increase has to be made in the growth of

the SME sector in the next 10 years. The SME sector is also doing contract

1 Small and Medium Sector is defined as per the MSME Act 2006 wherein a small scale unit is defined as that having investment in plant & machinery of Rs.25 lakhs to 5 crores. The medium enterprise is defined as having investment in plant and machinery between Rs.5 crores to Rs.10 crores.

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manufacturing for large MNCs and large Indian Pharma companies. This shows the

potential of the SMEs and for the growth of SME sector. The contribution of the SME

sector is discussed in more details later in this document as it was important point of

discussion for the Sub Group. Nevertheless it was unanimously agreed that in order to

support the growth of the Pharma Industry, the role of SME sector is important

alongwith with the leadership role of the large sector and so, a multi pronged strategy

would be necessary particularly in the context of the regulatory framework required for

enabling the growth of the Pharma sector as a whole.

Issue wise the recommendations of the Sub Working Group are as below:

1. To review the present status of WHO-GMP (World Health Organisation – Good Manufacturing Practice) certification and Schedule-M compliance and suggest measures for raising level of compliance by manufactures of Drugs and Pharmaceutical products in the country.

1.1 Schedule-M Compliance

1.1.1. The revised Schedule-M compliance standard was made mandatory w.e.f. 1st

July, 2005. The 11th Plan discussions on this subject made efforts to obtain the correct

picture as to how many units were Schedule-M compliant. The exact assessment was

not possible due to lack of accurate data due to shortage of drug Inspectors with the

Ministry of Health which is mandated alongwith the State Regulatory Authorities to

assess the compliance levels. However, it recommended a “Pharmaceuticals

Technology Upgradation Fund Scheme” (PTUFS) for enabling Schedule-M

compliance levels of the SME Units by proposing an Interest Subsidy Scheme offering

an Interest Subsidy of 5% on the loans made available to the SME Units with assistance

of upto Rs.50 lac to Rs.100 lac per units (Annex-III, Recommendations of 11 th Plan).

The scheme was to be operational for two years. It was also proposed to give soft loan.

It was estimated that out of the existing SMEs 40% may come forward to take

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assistance from the scheme. A fund requirement of Rs.560 crore was estimated and

the scheme was to be implemented with SIDBI as the nodal financial institution.

1.1.2 The Planning Commission approved the scheme with an outlay of Rs.340 crore.

Later however, the Department of Expenditure during the EFC dated 02.03.2009 for the

scheme advised that the existing upgradation scheme for SSI Units (CLCSS: Credit

Link Capital Subsidy Scheme) being implemented by Ministry of Micro Small and

Medium Enterprises (MSME) may be tweaked to include assistance for upgradation of

the SSI Pharma Units to Schedule-M standards. Based on the observation of the EFC,

DoP in consultation with industry finalized list of equipments for assistance under the

CLCS Scheme whereby the eligible equipments list was increased from 42

equipments to 178 equipments and machineries. Accordingly a Guideline was issued by

MSME on 13.7.2009. The CLCSS had provision for giving one time capital subsidy

assistance of upto Rs.25 lacs for upgradation projects of SSIs upto a total project cost

of Rs. 1 crore. As per the scheme a unit had to take a loan of Rs.75 lacs for availing the

capital subsidy assistance of Rs.25 lacs.

1.1.3 Following the notification DoP organized workshops in 9 large pharma cluster

places – Mumbai (Thane), Aurangabad, Nasik, Chennai, Ahmedabad, Hyderabad,

Chandigarh, Indore and Bangalore. These meeting were organized by in partnership

with Industry associations – SPIC, IDMA, CIPI, FOPE etc. While the participation was

encouraging, actual applications for assistance did not materialize. There was

reluctance on part of the SSIs to avail loan for taking advantage of the capital subsidy

as envisaged in the CLCSS. The provision for assistance by inclusion of 178

machines/equipments was announced as above only in July, 2009, that is 4 years after

promulgation of the revised Schedule-M scheme by which time a number of units had

either closed down or reduced their lines of production for ensuring Schedule-M

compliance. Therefore, after 4 years not many units were keen to take assistance as

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per the revised CLCS Scheme for SSI Pharma Units. Consequently, the scheme

advantage could not be rolled out.

1.1.4 Based on the above experience, now no assistance seems to be required for

Schedule-M compliance achievement by SMEs. All future units are being setup with

compliance to revised Schedule-M standards.

1.2 WHO-GMP Standard Compliance

1.2.1 India is a member signatory country to the WHO certification protocol on the

quality of pharmaceuticals products moving in international commerce as resolve by

WHA 22.5 (1969). India, being a signatory state has accepted the GMP text as an

integral part of the standards for export of pharmaceuticals products. As per

arrangement, WHO-GMP certification is granted by the office of the DCGI (CDSCO)

and State FDAs. The certification is for two years at a time.

1.2.2 Since export of generics is to be a key strategy for growth of pharma industry in

the country, hence upgradation of SMEs to WHO-GMP standards would enable them to

export their products and thereby increase profitability. It is estimated that at present

about 800 units are certified by CDSCO for WHO-GMP production. As there are about

10,000 plus Pharma SME Units in the country, therefore, the number of WHO-GMP

standard units should be raised to at least 2000 by 2012 to enable the SME sector to

increase and sustain its participation in the Pharma Industry growth process. This is

also important from the point of you that increasingly the regulatory requirement are

tending to become more stringent both in the country as well as internationally and

therefore it is for the benefit of the small, medium and large sector. Accordingly to make

a reasonable impact on the growth given the ambitious target of achieving USD 100 Bn

production by 2020, it is estimated that about 1000 - 1200 units will have to be assisted

for raising their manufacturing standards to WHO-GMP levels. At an average production

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contribution of USD 10 Mn per unit, this would mean additional contribution of about

Rs.10 Bn from the above target achievement.

This would require modification of the list of machineries from the existing Schedule-M

requirements. It was accordingly decided that a list of machinery and equipments

required for WHO-GMP manufacturing standards would be prepared formally by DCGI

and communicated formally to the Department of Pharmaceuticals (DoP) for circulating

to all concerned Industry Associations for their feedback before taking up the matter

with the Ministry of Micro, Small & Medium Enterprises (MSME) for upgrading the list

along with cost details under Credit Linked Capital Subsidy Scheme (CLCSS). This

would form part of the DPR for WHO-GMP standards achievement.

MSME would then accordingly include the list in the list of equipments and expenditure

approved in the CLCS scheme for SSI pharma to begin with. It is estimated that

upgradation to WHO-GMP standards would require project assistance of about Rs.3

crores. Accordingly, it is proposed that assistance to SSI Pharma Units under the

CLCSS may be provided for project cost of upto Rs.3 crores with capital subsidy of Rs.1

crore from the current level of Rs. 25 lakhs capital subsidy on a total project cost of

Rs.1 crore. Also the assistance should be dovetailed to provide soft loan interest rates

by the Banks for this upgradation. Similar assistance would be provided to the medium

scale enterprises who are not WHO-GMP standard but wish to achieve the level for

increasing their competitiveness.

On the whole this (for 1200 units at the rate of Rs.1 crore per unit) would require total

financial assistance of Rs.1200 crores as subsidy. An alternative to capital subsidy can

be interest subsidy scheme as earlier proposed under the PTUFS for Schedule-M

compliance in t he 11th Plan with the difference being that now a similar procedure is

being recommended for achieving higher standards i.e. WHO-GMP standards. It is

proposed that a Detailed Project Report (DPR for WHO-GMP manufacturing standards

upgradation for SMEs) may be prepared by DoP for this and submitted for approval of

Planning Commission and the Department of Expenditure through the EFC process for

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assistance under the 12th Plan. For the medium scale enterprises DoP would finalise the

scheme already pending with the Planning Commission by providing required data on

the number of medium level pharma units and their status of WHO-GMP standard

achievements.

1.2.3 Meanwhile, all representatives of industry associations (IDMA, SPIC, CIPI,

FOPE, BDMA, FICCI, CII, ASSOCHAM) would consult their members to ascertain the

status of compliance to WHO GMP and other International Standard and provide the

details of at least 100 or more units of SSI and MEs each which would be requiring

assistance from the Government for WHO upgradation. DoP would also issue

advertisement in newspapers inviting companies to give their proposals for upgradaton

and accordingly provide details for upgrading their facilities. There would be established

process for checking the WHO-GMP compliance status as well as the gap required to

be filled for achieving the set standard by installation of requisite plant and machinery as

well as required operating process and procedures.

1.2.4 The DCGI representative has emphasized that an important component of the

WHO-GMP certification was training required for putting in place standard operating

procedure to ensure WHO-GMP compliance. Accordingly, it was decided that the DoP

would organize workshops with the help of DCGI to educate SME units and industry

workmen about WHO-GMP standards in coordination and partnership with SIDBI /

Banks / SISI / DCGI / Industry Associations for this. For this, CIPI would organize

workshops in appropriate locations in Northern India, IDMA in Western India, BDMA in

Southern India. It was decided that in future representative of banks/ Financial Institutes

along with regulatory officials will also be ensured in order to sort out problems of loan

disbursement and other related problems being faced by SSI units. These workshops

should be funded by DoP. A detailed Working Manual would be prepared and

published for distribution to all concerns regarding achievement of WHO-GMP standard.

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As regards, compliance of reference standards was concerned, the Group felt that the

DCGI has not been able to provide Reference Standard, for example G.S.R. 852. In

this context, it has been decided that the reference standards should be specified

clearly and unambiguously. For this, reference working standards, impurity standards,

etc., should be worked out in consultation with the industry.

1.2.5 Further to above it is recommended that DoP should setup a full fledged

“International Manufacturing Standards Training Centre” especially for the industry

regulatory skill building as discussed above. A similar recommendation of Rs.100

crores was made in the 11th Plan but however the same could not be implemented. It is

accordingly proposed to setup one national center and five regional centers at

Chandigarh (at NIPER, Mohali), Hyderabad, Chennai, Ahmadabad, Mumbai and

Kolkata. An amount of Rs. 60 crores should be allocated for setting up of the centers.

This would meet the capital cost including land, building and equipments. As regards

the operating cost, 70% would be borne by the industry and 30% by the government on

a recurring basis. The operation of the center would be done in a PP mode in

association with the industry association. The DPR proposed earlier would detail out the

structure and management of these centers. The centers would provide training in

WMO-GMP standards and other international manufacturing standards like USFDA,

MHRA, TGA, EDQM etc., Training would also be provided on Indian Pharmacoepia as

well as International Pharmacopeia standards required for achieving standards

compliance.

Some 5,000 suitably qualified working professionals in the industry would be trained as

above. Professional Consultants would be hired for the purpose would also assist in

developing Standard Operating Procedure (SoP) required for achieving compliance

standards.

1.2.6 The Sub Group also discussed synergy strategies to address regulatory

compliance even while promoting growth of the pharma industries. In this connection,

Cluster based approach was discussed as an important strategy now increasingly being

recognized as an effective and sustainable strategy for competitive enhancement of

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MSMEs. Such an approach, which leverages the geographical proximity of the

enterprises on ‘collaborating while competing’ principle, is participatory and cost

effective. As it provides critical mass for customization of interventions, the DoP could

implement Cluster Development Programme for Pharma Sector SMEs (CDP-PS) to enhance Quality, Productivity & Innovative capabilities of the SME

Pharma sector in the country through better standards compliance. The Scheme

would be implemented on a Public Private Partnership (PPP) format. Support from the

DoP would be by the way of grant for creation of identified infrastructure and Central

facilities will be set up by Special Purpose Vehicles (SPVs), formed by group of

entrepreneurs from the Cluster being benefitted. Such clusters presently exist in

Baddi (HP), Hardwar (Uttarakhand) and Gurgaon (Haryana) in the north,

Pattancheru, Pashmalyram and Khazipalli (in A.P), Alandur and Ambattur (both in

TN) in the South, Thane, Nashik, Aurangabad (all in Maharashtra), Vadodara and

Ahmedabad in Gujarat in the West and Goa/Sikkim in other special areas.

Therefore, such Central facilities would be set up in their clusters in the first

instance. Examples include:

Central Facilities Centre for quality and Govt. compliance.

Central Cold Chain facilities for Pharma Products.

Central Formulation and Product Development Facilities.

Central Environment Treatment Plant Facilities.

Other Common facilities as may be required.

The GOI grant would be restricted to assistance for land, building and machineries

cost. The operational cost to the extent of 70% would be met by the industry on a

recurring basis.

1.2.7 The cluster development approach could also be expended further to include

setting up of centers for generics development even while ensuring synergistic

regulatory compliance. For this it was envisaged that formulation development center

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could be established which would assist the SME Pharma in particular for development

of new formulations with a view to taping the vast opportunity opening up due to off

patenting of a number of molecules resulting in drugs worth US $ 300 billion to lose their

patent in the next five to seven years which would come under the generic domain and

would so be available for manufacturing by any unit after the expiry of the patent period.

In this regard it was recommended that there should be at least one National

Formulation Development Centre (NFDC) set up to assist the SMEs for the

development of new formulations which are the source of increasing production in the

domestic and export market. India Pharma Sector can tap this opportunity only if the

SME pharma sector is able to grow itself to develop this generic formulation and to

produce them not only for domestic consumption but also for exports. For this, as

already stated, not only there should be technological help but infrastructure facility

assistance in the form of PPP model set up of at least one Regional Formulation

Development Centre (RFDC) in each of the identified cluster growth areas of the

pharma sector in the country.

1.2.8 The Sub Group recognized the importance and usefulness of IT for strengthening

regulatory compliance in a cost effective manner. Accordingly it was recommended that

a project for developing IT software may be taken up for helping the SMEs in achieving

various regulatory compliances. After development, the software would be distributed by

the Department to the industry free of cost. DCGI office would provide full technical

guidance support for this. It was also decided that MoHFW/IPC would consider that in

order to increase awareness among SME, an option of reducing the cost of Rs. 15,000

per copy by putting Pharmacopeia on the internet may be explored as is the practice for

several international pharmacopeia such as USP and BP.

1.2.9 Under the Drug Price Control Order such SSI pharma units are exempted from

Price Control. In this context, as the SSI units have no incentive to grow themselves

into medium level in the present price control regime, a special provision needs to be

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made for the SSI pharma units to enable them to have higher level of investment in

plant and machinery as mandatorily required for WHO-GMP Certification even while

claiming SSI status. Therefore, limit of SSI categorization of pharma units should be

increased from 5 crores to at least 8 crores both for DPCO incentivisation and MSME

assessment. Similarly in the DPCO, the exemption from price control would be

provided to Pharma Units having appropriately certified investment of upto Rs.8 crores

in plant and machineries and having WHO-GMP certification.

1.2.10 Other related issues discussed in the Sub Group related to (i) Marketing

Authorization for generic product approved in regulated markets, (ii) Marketing

Authorization for generic product not approved in any regulated market; (iii) Clinical Trial

Application for generic version of a medicine already approved in India; (iv) Clinical Trial

Application for generic version of a medicine not approved in India; (v) Clinical Trial

Application for a new drug having origin in India and (vi) Clinical Trial Application for a

new drug having origin outside India. It was further stated that the current practice of

clubbing different activities under one process should be done away with. IPA stated

that approval for marketing norms is different for conducting clinical trials for generics.

IPA has submitted a document to MOHFW in this regard. It was decided that a copy of

the document would be forwarded to DoP.

It was pointed out that marketing approval and approval of clinical trials need to be

delinked. It was further stated that drugs available in the other countries but being

marketed first time in India are being classified as new drug for which Clinical Trials are

required to be conducted. DCGI representative stated that Drugs & Cosmetics (D&C)

Act 1940 only defines drugs and new drug and generics have not been defined in the

Act. There is a requirement of producing minimum 3 batches of 1 lakh tablets for

conducting stability data and for ensuring consistency of quality. Further, the batch size

of 1 lakh tablet though is generally fixed; it can vary depending on the product involved.

DCGI representative while pointing out the need to conduct phase III clinical trials in the

country as per the requirements Schedule 'Y' of D&C, Act 1940 stated that results

related to stability and efficacy varies from population to population. It was decided that

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all related issues should be elaborated by the industry and feedback should be given to

DoP. MoH & FW should nominate a representative of DoP to all Committees being set

up by MoH&FW for recommending changes in this regard in future.

1.2.11 Regulations concerning Government procurement from SME sector

There is a need to have a strategy for government procurement of drugs/ medicines

from SME as various state governments/ Government Institutions have laid down

restriction of minimum turnover of 35 to 50 crores for SME sector, for which efforts need

to be made to remove such restrictions. It was also stated that 70% Government

procurement amounting to Rs.7000/- crores is being done from SME units. IDMA also

informed that this issue was taken up with the Competition Commission earlier.

However, Commission has not taken any concrete action since all circulars and

instructions were stated not to be notified. In this connection, all the industry

associations representatives stated that the issue of insistence on WHO GMP

compliance by the government institutions/hospitals also needs to be addressed

suitably for Government. DCGI representative informed that a circular has already been

issued in 2005 in this regard. It was decided that a copy would be provided by DCGI

which would be circulated to all Industry Associations by DoP. It was also decided that

copies of guidelines/ instructions/circulars in this regard issued by various State

Governments/Institutions/Hospitals would be provided by IDMA to DoP and this issue

would be discussed further by organizing a meeting of all concerned stakeholders.

1.2.12 Regulation of biosimilar drugs

It is understood that the Department of Biotechnology (DBT) has drafted a set of

guidelines for conducting pre-clinical trials of biosimilars. These are in the context of

regulations concerning manufacture and marketing of biosimilars presently governed

by the Environment Protection Act of 1970 and the Drugs & Cosmetics Act of 1940.

Presently, even though biosimilars are regulated under these provisions of these Acts,

there are no set of specific rules to enable speedier and unambiguous clearance for

production of biosimilars. This is important in the context of the fact that biosimilars is a

very strong emerging market opportunity for the country to the tune of Rs. 300 bn. The

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DBT needs to take into confidence the industry through DoP  to enable drafting of

proper guidelines for production of biosimilars in the country.

1.2.13 There is also discussion regarding formulation of a National Antibiotic Policy by

incorporating a new schedule namely HX in the Drugs & Cosmetics Act so as to prevent

large scale misuse of antibiotics in the country which are currently placed under

Schedule H of the D&C Act. This mainly concerns prescription and retailing of

antibiotics but should be done in consultation with the industry through DoP.

1.2.14 Another important issue concerns regulation for approval for fixed drug

combinations. This needs to be evolved in consultation with the industry. The DTAB

under the DCGI should have a representative of DoP so as to ensure that the Pharma

Industry concerns are addressed in a speedy and unambiguous manner.

1.2.15 The classification of medical representatives hired by the Drug Industry as

Workmen and the Labour Laws needs to be carefully examined again in the context of

the nature of the job which is an important regulatory issue concerning the pharma

industry sector. The industry and the DOP need to be taken on board in the context of

ongoing discussions in the Ministry of Labour and in the Ministry of Health.

1.2.16 The following actions are identified to overcome the challenge relating to

regulatory incentivisation of the Pharma sector in the context of R&D and also for taping

the generics opportunity.

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Present Status Proposed Change

(a) The fiscal benefit of weighted deduction for expenditure on scientific research u/s 35 (2AB) of Income Tax Act expires on 31 March 2012

This should be extended for a period of at least 10 years upto 31 March 2022. It should always remain valid for 10-year period.

(b) The expenses incurred on clinical trials, bio-equivalence studies, regulatory approvals and patent filings outside are not eligible for weighted reduction u/s 35(2AB).

Section 35 (2 AB) should be modified to include these expenses.

(c) S. 35A offers 200% weighted deduction for in-house R&D. However, with the imposition of Minimum Alternate Tax [MAT] of 20%, companies are unable to avail full benefit of weighted deduction. Though the law provides for carryover and set off, the ongoing and ever growing investment in R&D does not allow benefit of weighted deduction to R&D intensive industry.

Modify MAT to allow companies to take benefit of weighted deduction of 200% for R&D.

Alternatively, the amount spent for R&D should be treated as TAX CREDIT [Investment Tax Credit] and be allowed to be set off against Tax and/or MAT Payable.

(d) The weighted deduction u/s 35(2AA)allowed on sponsored scientific research undertaken through an approved national laboratory, university, Indian Institute of Technology and other specified institutions was increased from 125% to 175%.

The weighted deduction u/s 35(1)(ii)on contributions made to approved scientific research association, university, college or other institutions was also increased from 125% to 175%.

Similarly, the weighted deduction on contributions made u/s 35(1)(iia) to a company engaged exclusively in R&D and approved by the specified authority, should also be allowed.

(e) Grants and Interest Subsidy Allow grant of upto 75% for capital investment in technology development.

Offer soft loans for capital investment and working capital for technology development.

Ease administrative price control on products commercialized out of indigenously developed technology.

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(f) Exemption from Duties and Taxes:

Input credit is available only if R&D equipment and raw materials are used in the same premises where excisable goods are manufactured Several companies have set up R&D centres away from their factory premises. They are not eligible to claim credit for inputs/capital goods procured for the purpose of research and development. Thus, there is a distinction between R&D units within the factory premises and outside the factory premises.

The rules should be amended to allow CENVAT credit on all inputs used for R&D purposes even if they are used in a location outside the factory premises.

All inputs including capital goods and equipments necessary for carrying out research and development should be fully exempted from all duties and taxes.

1.3 Schedule-L compliance

The DCGI has made it mandatory for all units to be Schedule-L compliant as from

August, 2011. In this context there is need to understand the applicability of Schedule

‘L’ compliance for SSI Units are part of the GMP practices. As per DCGI, guidelines for

GLP compliance applicable only for pre-clinical studies. In view of the divergent views

expressed, it was decided the issue of compliance of Schedule ‘L’ would be examined

and clarification would be issued thereafter by M/o Health & FW. It is also to be

examined as to what amendments need to be made in the list of 178 items/equipments

currently included in the CLCSS scheme of MSME for Pharma SSI units for Schedule

‘M’ compliance and modified list, if required, along with cost details and other

requirements for ensuring Schedule ‘M’ and ‘L’ compliance would be suggested by O/o

DCGI. Initially DCGI would undertake this exercise which will focus on critical items

which make major contributions in production facilities especially of SSI and MEs. The

industry associations would give their suggestions for modifying and upgrading the

current list.

Also it was decided that there is need to remove confusion and apprehension of SSI

units and clarification to this effect that for units already compliant to Schedule ‘M’ no

further compliance for Schedule ‘L’ need to be ensured, would be issued by DCGI/ MoH

& FW.

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2.0 Regulatory matters concerning Exports - IPR, TRIPS, Patent Linkage, Importing countries standards compliance, FTAs, Data Exclusivity and other related issues

2.1 On the issue of Regulatory matters concerning Exports - IPR, TRIPS, Patent

Linkage, Importing countries standards compliance, FTAs, Data Exclusivity, etc., it was

pointed out that both large and SME units are finding it difficult to cope up with the

stringent demands being placed on these units especially related to Intellectual Property

Rights (IPR) and other regulatory demands. In this connection it was recognized that

Indian Pharma Industry consists of 50% domestic and 50% of export market and issues

concerning both these segments need to be addressed separately. On account of this,

for the export units, different requirements are being specified by importers in different

countries, which are becoming difficult to comply with.

Further, different Laboratories especially Government and Private labs are having

different Standard Operating Procedures (SOPs). As a result samples being tested for

export in Government/public labs are most likely to fail. In this context, there is a

requirement to spread awareness and educate SME units about SOPs for testing their

products. In this regard, while the Indian Pharmacopeia has prescribed testing

procedures and is currently having 2000 monographs including validation of procedures

which has to be followed by all manufacturers, there needs to be clear understanding on

the requirements. It was accordingly recommended that DoP in partnership with

MoHFW/IPC launch programmes to increase awareness among SME and country wide

workshops for training SME pharma on the SOPs for testing and fulfillment of Exports

requirements.

Even for regulations compliance as per existing status there is need for training of the

Pharma professional in a workshop mode to train them concerning compliance on

existing IPR, TRIPS, Patent Linkage, Importing countries standards compliance, FTAs

and Data protection provisions. This is besides the fact that contentious issues

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concerning these points need to be addressed in a comprehensive manner on a

continued basis which the DoP needs to take up in a more proactive manner.

2.2 It was further recognized that exporting units including bulk drugs and

formulations Pharma units are facing three types of non-tariff barriers related to

regulatory requirements from EU. Firstly that Indian Drug Manufacturing Units exporting

to EU have to ensure compliance to EDQM and have to obtain their certificate for every

drug in addition to the standards for the importing country. This is acting as an

additional barrier. IPA further informed that EDQM certificate is applicable for bulk drugs

for 3 years and there is currently a proposal under consideration for charging 15,000

Euros for issuance of certificate per bulk drug. Secondly, in the case of bulk drugs, third

party audit are being insisted upon as a result companies are being forced to divulge

their intellectual property infringing on their right to protect data. Thirdly, EU is insisting

on verification of pedigree of Active Pharmaceutical Ingredients in case of export of

formulations. In order to address this multipronged barrier, there is a need to create

synergy among various government departments/ministries viz. Department of

Commerce (DoC), Pharmexcil, M/o Health & FW, DoP for formulating an integrated

strategy to tackle such barriers and may include taking counter measures. The efforts

by Pharmexcil in taking up the matter with DoC were discussed including the initiative

to take up dialogue with the concerned embassies and MPs from EU in India. DoP

needs to take up this issue in a more proactive manner with DOC etc.

2.3 As regards the requirements for IPR enforcement under various trade

agreements viz. Trade Related Intellectual Property Rights (TRIPs) of WTO, World

Intellectual Property Organisation (WIPO), Anti Counterfeit Trade Agreement (ACTA),

etc. due to lack of clarity of the exact requirements under these agreements, exporters

in India are facing problems in ensuring their compliance which is affecting their exports.

Furthermore, efforts are being made by a few countries especially developed countries

to define additional requirements in a sophisticated manner resulting in TRIP plus

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arrangement which is likely to impact Indian exports adversely in the long run. IDMA

representative stated that they had already taken up the issue, and are currently

observer on WIPO and had attended latest Congress in Paris. These issues need to

be tackled in a comprehensive manner by joint efforts of DoP and DoC .

2.4 Another issue concerns Trans Pacific Partnership Agreement (TPPA), a new

regional free trade agreement which include the United States, Australia, Peru, Vietnam

and Malaysia, Japan, etc. and builds on an existing Free Trade Agreement between

New Zealand, Chile, Singapore and Brunei Darussalam. Under TPPA, these countries

are defining stringent conditions even for products transiting these countries which are

likely to have adverse impact on Indian Pharma products. In this connection while the

private industry has taken up initiatives with South American countries, namely Brazil,

Argentina and Mexico etc. to address issues related to exports, however, problems

remain especially with countries like Argentina. These need to be addressed

emergently. In this connection, while there is a trust deficit between the industry and

the government especially in the context of government signing Free Trade

Agreement(s) with various countries wherein facility of zero duty is being extended there

is every likelihood of creation of further problems without proper involvement of the

Industry.

2.5 On the issue of data exclusively It was agreed that data exclusivity should not be

insisted upon as there are 200 preparation patents are expiring in USA. While DoC has

taken up issue of data exclusivity and patent linkage and draft also has been circulated

by Deptt. of Industrial Policy and Planning (DIPP), there is a chapter on investment

related to issue of IPR which might impact industry adversely. In this connection, while

assurance has also been given by DoC/DIPP that additional conditions of IPRs would

not be imposed and statements issued to the effect that India would not accept any

TRIPs plus arrangement including any condition of data exclusivity there was need for

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to be actively involved on behalf of the industry with DoC and DIPP for a holistic view

point.

2.6 It was recognized that while there is need laying a pathway for building and

improving regulatory infrastructure of the country, however, the pathway should be

calibrated to suit the country’s social goals and infrastructure. Utmost care should be

taken to ensure that the regulatory authority is exercised with caution and after

consultations with the stakeholders. Nothing should be done blindly to imitate the

regulatory norms of the developed countries that may curb development of innovative

processes for better yields and quality – a unique strength of the Indian pharmaceutical

sector. It was agreed that regulatory requirements are being modified at very fast

pace which is creating problems for domestic manufacturers. Though the industry is not

opposing the regulatory requirements being specified by the Government, there is need

for the Government to ensure smooth transition. It was recognized that the regulatory

environment is becoming more stringent day by day due to popular pressure even for

domestic manufacturers in developed markets. In this context therefore, Indian pharma

industry needs to assume a leadership role and effort to be supported by pro active

participation of MoH&FW and DoP.

2.7 In the special context of these regulations impinging on Indian Pharma’s

leadership in the API sector, it was decided that in order to address these issues, details

of APIs production especially in Spain, Italy, Portugal and Eastern Europe would be

collected. IPA and BDMA would conduct a study, to be funded by DoP, and prepare a

report on export of Indian APIs/formulation drugs to EU and details of APIs being

manufactured in these countries in 4 weeks time. IDMA was asked to provide further

details with regards to Paris meet. It was also agreed that there is a need to tackle

these issues in organized manner wherein representatives of the industry need to be

co-opted in the efforts. It was decided that a Cell would be established in IPA, to be

funded by DoP, on all issues related to IPR, regulatory issues, etc. acting as barriers.

IPA will respond and provides its feedback on the proposal in 3 weeks time. Also

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Regular and periodic meetings could be held between DoP, MOHFW, DoC and Industry

to address these issues on a continued basis.

2.8 It was also decided that in order to examine issues related with possibility of

adoption of Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-

operation Scheme (jointly referred to as PIC/S), two international instruments between

countries and pharmaceutical inspection authorities, which provide together an active

and constructive co-operation in the field of GMP. PIC/S' mission to lead the

international development, implementation and maintenance of harmonised Good

Manufacturing Practice (GMP) standards and quality systems of inspectorates in the

field of medicinal products, is to be achieved by developing and promoting harmonised

GMP standards and guidance documents; training competent authorities, in particular

inspectors; assessing (and reassessing) inspectorates; and facilitating the co-operation

and networking for competent authorities and international organisations.

2.9 For this, a Task Force headed by Shri V. Topa to be supported by IPA, to be

funded by DoP, would prepare a road-map on all the above issues 2.1 to 2.8 and submit

the details to DoP. It was also decided that report of the Task Force of Department

Commerce would be examined and appropriate action would be suggested by this

SWG.

2.10 2D Barcoding

The Sub Group discussed in detailed regarding the Regulatory requirement regarding

2D Barcoding for export of medicines mandated by DGFT w.e.f. 1 July 2011 to prevent

fake medicines. It was pointed out that Barcoding was devised as a means of Inventory

Control by Supermarkets in the West as it is impossible to physically control inventory of

thousands of items. That Pharma MNCs use Barcoding to prevent transfer of medicines

from one country to another as their MRP varies in each country. However, since

Barcodes can be replicated, hence they cannot be uncontroverted mechanism for

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preventing counterfeit drugs. The implementation of 2D Barcoding at tertiary level i.e. at

strip level is very expensive. It is estimated that the cost for a small unit monthly cost

would be around Rs.1,00,000- for barcoding. Thus for example, the cost on inks alone

for a small unit producing 10,000 strips per day shall be Rs.25,000 per month which

works out to be 1 paise per tablet. Additionally, there would be costs of Registration with

M/s GS1, Interest on Investment on Machines, Depreciation, Rejections, Annual

Maintenance Contract (AMC) which is around 10% of Machine cost, labour - especially

in sorting 30% rejections. All this would add up to around 4 paise per tablet. Indian

Pharma SMEs exporters are known for Affrodable Drugs the world over. Paracetamol is

exported @ 16 paise per tablet. A 4 paise increase per tablet works out to be 25%

increase in price - more than enough to edge out Indian SMEs from competition and

loose the business to China. On the other hand while one tablet of Generic version of

Viagra costs 60 paise and is exported by Indian SMEs for 70 paise the same tablet is

retailed for $10 each by Pfizer under the Brand Name of Viagra in countries where

Patent is applicable. It should be noted that while MNCs who export high priced

patented drugs have no such problem, the SME sector would be handicapped by

avoidable expenditure on extra regulatory compliance.

An important issue in the connection relates to preparation of art works. Many importing

customers send their artworks for labels and packings as per norms of importing

country. All such orders would be cancelled or material rejected. The    Barcodes have

no use when Non- branded drugs for Hospitals in foreign countries are exported as they

are never counterfeited like expensive brands of MNCs. A strip of 10 tablets of

Paracetamol is exported for Rs.1.50 each. There is simply no motivation as it will be like

counterfeiting One Rupee coins. Barcoding is impossible when labels of medicines are

too small like Tetanus Toxoid and Zentel – size 20mmx25mm. Hundreds of Small

consignments valued between US$ 5000-10,000 each are exported by Indian SMEs

each day. Each consignment consists of several items. All Such exports shall cease

with one stroke in view of the fact that Barcoding renders them unviable - which seems

one of the real motives. other pitfalls of Barcoding relate to the fact that Barcode

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Machine Suppliers have opined that rejections shall be a minimum of 30%. So far they

have been unable to perfect the machines for better results. It means a lot of time and

money will go into sorting out good and bad strips, which could easily result in delays

and hence cancellation of orders.

As per DOC, only one company namely M/s GS1 has been appointed as the sole

Barcode provider by Government. SMEs will have to source their Barcodes and

accessories like Inks etc, from them. It is well established that free 2D Barcodes

available on the Internet. With tens of thousands of brands this would be unfair practice

to benefit GS1 company

In this context it is worthwhile to examine conditions like stipulation of 2D Barcoding

only if the importing country mandates a specific requirement, then exporter can adhere

to the same. The word importing country should be substituted by Importer. Based on

the above, the Sub Group was of the recommendation t hat the matter needs to be

discussed at length with DOC for acceptable resolution.

It has to be understood that in the past, MNCs have repeatedly tried to browbeat India

medicine exports. High quality Affordable Generics exported by Indian SMEs have been

categorized as “counterfeits” in the West and seized at Transit Ports in Europe even

when neither the producing country (India) nor the importing country in Latin America

had Patents on the medicine. Also Counterfeit issues have been equated with “fake”

and “spurious” drugs (a public health issue). CDSCO had mooted amendment of

Definition of Spurious Drugs in World Health Assembly based on IMPACT proposal.

Thus while Barcoding is being portrayed as a step towards increasing Export, in real

terms it makes exports cumbersome and impossible from SMEs. Export prices shall

increase and lead time for shipment shall increase which deprives Indian SMEs of

competitiveness in International market. This will either enable China or MNCs to take

over. The matter needs to be resolved quickly.

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In any case, since bar coding would be an important Regulatory requirement in the

times to come, therefore, it was recommended that an allocation of Rs. 100 crores may

be made for assisting SMEs to enable them to install and establish 2-D barcoding

technology for the 12th Plan. A DPR would be prepared by IDMA and SPIC which would

be funded by DoP for submission to the Planning Commission.

 

3. To examine the need for further strengthening to tackle the menace of spurious drugs, etc., and examine the need for an Apex Authority to control price, quality and supply of drugs.

3.1 It was noted that in the Eleventh Plan recommendations, a proposal for National

Authority for Drug and Therapeutics (NADT) but no clarity had emerged for addressing

issues related to pricing, quality and supply of drugs in holistic manner. NPPA is

handling issues relating to pricing and DCGI is handling issues related to quality of

drugs including Good Distributing Practices (GDP), there is currently no authority for

ensuring supply of sufficient good quality drugs. There is a perceived need of industry

for setting up of a NADT addressing all these issues in a single window mode. During

the course of discussions, in the Twelfth Plan Sub-Working Group Two Industry

associations namely OPPI and IDMA supported the proposal of having a single window

system for addressing these three issues. It was pointed out by some other

Associations like IPA that pricing and regulatory issues should not be part of one

authority/body under any single ministry of Government of India. It was further informed

that a bill of M/o H & FW for setting up a CDA dealing only with regulatory issues

without addressing the issues related to pricing is pending in Parliament by taking away

some powers from the State governments. This bill was sent to Rajya Sabha in 2009.

In this context, it was decided that a copy of the proposal of DoP for National Authority

for Drugs and Therapeutics (NADT) needs to be examined in further detail outside the

Twelfth Plan Sub-Working Group discussions in a more comprehensive and focused

manner.

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3.2 As regards, the issue of tackling of spurious drugs menace, it was agreed that

this is an exclusive subject of the Ministry of Health and hence DoP may not included in

the Twelfth Plan Working Group discussions as part of subject to be dealt with in DoP.

4.0 To indicate the milestones to be achieved in the 12th Plan in the context of long term goals as per Item-I of the ToR and recommend programmes/schemes/measures that are to be initiated, continued or discontinued in the 12th Plan period and estimated fund requirement

4.1 At the outset the Sub Group discussed in depth regarding the availability of

credible data on the pharma SMEs is very important. This issue was also highlighted in

the 11th Plan discussions wherein it was estimated that as per 3rd All India Census of

Registered SSI Units, conducted by the then Ministry of Small Scale Industry, there

were 6090 SSI Units in 2001-02.. The compliance position in respect of them was

stated as below:

1672 – Schedule-M GMP Compliance

1797 in the process of establishing Schedule-M GMP Compliance

370 units not in a position to comply GMP norms

337 units have surrendered their licences for manufacture of drugs

The present position of data needs to be examined in the context of the available data

base of 350 companies from Centre for Monitoring Indian Economy (CMIE). It provides

very useful information from the published annual accounts of companies. The table

below from this data base presents domestic and export sales of Formulations and APIs

(at the first point) for the 15-year period ended March 2010:

Page 24 of 32

Domestic and Export Sales (Rs. crores)

Year Exports Growth % Domestic Growth % Total Growth %

Mar 1995 1,701.13 0.00 10,645.58 0.00 12,346.71 0

Mar 1996 2,498.52 46.87 12,676.86 19.08 15,175.38 22.91

Mar 1997 2,991.48 19.73 13,987.63 10.34 16,979.11 11.89

Mar 1998 3,396.12 13.53 15,436.74 10.36 18,832.86 10.92

Mar 1999 3,923.62 15.53 17,998.73 16.60 21,922.35 16.40

Mar 2000 4,801.46 22.37 20,590.23 14.40 25,391.69 15.83

Mar 2001 5,654.37 17.76 21,540.81 4.62 27,195.18 7.10

Mar 2002 7,385.95 30.62 23,315.83 8.24 30,701.78 12.89

Mar 2003 9,809.31 32.81 25,911.22 11.13 35,720.53 16.35

Mar 2004 12,466.12 27.08 29,642.54 14.40 42,108.66 17.88

Mar 2005 14,385.16 15.39 31,435.52 6.05 45,820.68 8.82

Mar 2006 16,724.33 16.26 37,283.54 18.60 54,007.87 17.87

Mar 2007 22,736.95 35.95 42,247.14 13.31 64,984.09 20.32

Mar 2008 27,155.53 19.43 49,087.79 16.19 76,243.32 17.33

Mar 2009 33,412.45 23.04 54,106.89 10.22 87,519.34 14.79

Mar 2010 36,683.34 9.79 59,828.93 10.58 96,512.27 10.28

Source: CMIE (As of 9 June 2011)

As may be seen from the above table, the domestic sale has doubled every five years.

For the 15-year period (1995-2010), the domestic sale has grown at compound annual

growth rate (CAGR) of 12 per cent, whereas exports have grown faster at CAGR of 22

per cent. The CAGRs, measured by three five-year periods, viz. 1995-2000, 2000-2005

and 2005-2010, are indicative of the growth trends:

Page 25 of 32

CAGRs for Three Five-year Periods

Period Exports %

Domestic %

Total %

1995-2000 23 14 16

2000-2005 24 9 13

2005-2010 20 14 15

The deceleration in the CAGR for exports during 2005-10 could be due to global melt

down in 2008-09 and rising non tariff barriers by the developed countries. The slow

down during 2000-05 in domestic sales could perhaps be attributed to greater focus on

the global markets.

The second data base is IMS Health data. It is based on a sample of 450 companies,

provides trade and institutional sales of formulations in the domestic market. Its data for

the five-year period ended March 2010 is given below:

Indian Pharmaceutical Market

Year Trade Sales (SSA)

Institutional Sales (HSA)

Total Sales (SSA + HSA)

Value Growth %

Mar 2006 24437.2 1921.2 26358.4 15

Mar 2007 27955.6 2276.9 30232.5 14

Mar 2008 32108.8 2532.2 34641.0 15

Mar 2009 35367.5 2949.8 38317.3 10

Mar 2010 41700.7 4035.9 45736.6 18

Source: IMS Health MAR MAT 2010

The data reflects domestic sales value of formulations only. It captures sales at the

second point from Stockists to Retailers and Hospitals separately. It does not capture

tender or direct sales by companies to hospitals. As may be seen from the above table,

the domestic formulation sale has grown at CAGR of 15 per cent in the four-year period

(2006-10) from Rs 26,358cr to Rs 45,737cr.

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It is noteworthy that the last 200 companies in IMS Health data base contributed only

Rs 114cr or 0.25 per cent of the total sales value of Rs 45,737cr in 2009-10. This is

indicative of the direct contribution of the small scale sector to the total pharmaceutical

direct sales. The small scale sector needs careful consideration and validation of its

contribution from the sales contribution point of view so as to properly assess its role in

shaping the future growth of the pharmaceutical sector.

Going forward, the growth will accelerate further. The patent expiries, pressure on the

developed country governments to contain their healthcare expenditure and readiness

of the domestic companies will drive exports. On the domestic front, rising income,

improved health infrastructure, rise in the prevalence and treatment of chronic diseases,

high prices of patented products and greater market penetration will accelerate the

growth.

Projected Growth of Pharmaceutical Sector

Year

Export Domestic Total

Rs 000 cr

Growth %

Rs 000 cr Growth %

Rs 000 cr Growth %

Base Year (2009-10)* 36,683 9.79 59,829 10.58 96,512 10

(11th Plan) 2011-12 51,078 18% 76,390 14% 127,467 16

(12th Plan) 2016-17 130,302 21% 157,690 16% 287,992 18

Target Year (2019-20) 232,7462 22% 248,2593 17% 481,0054 19

*CMIE Data Base Source: IPA

It may however be noted that these are very challenging targets.

Role of Public Sector: The Public Sector, which played key role in the growth of the

domestic industry, has become unviable. It would be a herculean task to revive them in

today’s competitive environment without protectionist policies. At best, it can become a

catalyst for indigenous production of APIs and intermediates from the basic stage for

supporting the domestic bulk drug industry and address strategic goal of reducing 2 About USD 46.5 Bn.3 About USD 53.5 Bn4 About USD 100 Bn.

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reliance on the third country thereby ensuring medicine security and growth of domestic

industry.

Role of Medium & Large Domestic Companies

The medium and large domestic companies have been the drivers of growth,

contributing 75% of direct and indirect domestic sales and over 90% of direct and

indirect exports. Besides sales, other indicators that bring out contribution of the

medium and large domestic companies are gross fixed assets formation, increase in

wages and R&D spend. The export of top 50 companies for the year 2009-10 reveal

that pharmaceutical industry’s foray in the global market is driven mainly by the

domestic companies (Annex – B). These top 50 exporters accounted for 76% of total

exports of Rs 36,683cr in 2009-10. It is noteworthy that only two foreign companies

feature in this list contributing less than 2% of the total pharmaceutical exports. The

annual increase in the gross fixed assets of domestic and foreign companies is given in

Table below.

Gross Fixed Assets and Annual Increase

Year Domestic Companies Foreign Companies

Gross Fixed Assets

Rs Cr

Addition For the Year

Rs Cr

Gross Fixed Assets

Rs Cr

Addition For the Year

Rs Cr

Mar 1995 4,647 0 927 0

Mar 1996 6,388 1,741 1,085 158

Mar 1997 7,803 1,415 1,202 117

Mar 1998 9,552 1,750 1,308 105

Mar 1999 10,703 1,150 1,453 145

Mar 2000 12,271 1,568 1,504 51

Mar 2001 13,083 812 1,524 20

Mar 2002 14,733 1,650 1,499 -25

Mar 2003 17,455 2,722 1,729 230

Mar 2004 20,713 3,258 1,966 237

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Mar 2005 25,639 4,925 2,054 88

Mar 2006 31,061 5,423 2,254 200

Mar 2007 36,503 5,442 2,522 268

Mar 2008 43,807 7,304 2,910 388

Mar 2009 51,946 8,138 3,454 544

Mar 2010 58,658 6,712 3,949 496

Total Increase in 15 Years 54,010 3,022

Source: CMIE

This 15-year period is hall mark of India’s move to market economy and liberalization of

trade and investment policies. India signed TRIPS Agreement in 1994 signaling

reintroduction of product patent from 1995 and allowed 100% foreign equity through

automatic route in the pharmaceutical sector from 2001. Notwithstanding these policy

changes, the foreign companies seems to have done little to increase their investment

in the manufacturing sector, as may be seen from the above table. The foreign

companies invested Rs 3,022cr only in the fixed assets as compared to Rs 54,010cr by

the domestic companies between 1995-96 and 2009-10.

Wages and employment is another indicator of the contribution of the domestic

companies. According to CMIE data base, the wage bill of the domestic companies

reported more than twelve-fold increase over 15-year period from Rs 664cr in 1994-95

to Rs 8,172cr in 2009-10. On the other hand, the wage bill of foreign companies

reported only a little over three-fold increase from Rs 350cr in 1994-95 to Rs 1,215cr in

2009-10. It is thus evident that the maximum employment is generated by the large and

medium domestic companies. The employment data for the pharmaceutical sector from

the Annual Survey of Industries (ASI) is given below:

Employment Data for Pharmaceutical Sector

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Source: Annual Survey of Industries Ministry of Statistics & Programme Implementation

It may however be noted that the drugs and pharmaceutical is not a very labour

intensive industry compared to textiles, software and automobiles.

In the above context, the 4th Census of the MSME Units done by MSME is important.

The initial assessment by DDG, Department of C&PC was of 10563 units, the details of

which were published in a Directory in 2008-09. Later, this data was sought to be

validated by MSME and the work was also given to expert agency – ICRA. This work

is still in progress and data is being collected from State Governments regarding SSI

and Medium Enterprises separately along with the status of WHO GMP Compliant

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Year No of Employees

Mar 1995 1,81,497

Mar 1996 2,04,609

Mar 1997 2,11,614

Mar 1998 1,89,295

Mar 1999 2,13,999

Mar 2000 2,43,410

Mar 2001 2,33,704

Mar 2002 2,26,416

Mar 2003 2,23,556

Mar 2004 2,40,791

Mar 2005 2,65,396

Mar 2006 2,90,021

Mar 2007 3,36,211

Mar 2008 3,53,692

units. In this context, it was decided that all Industry Associations, DoP, MoHFW,

Pharmexcil and MSME would team together to prepare reliable comprehensive data on

SME pharma units. To begin with details of new SSI units set up since 1 st April, 2008

would be collected by DCGI through State Drug Controller and provided to the

Department in three weeks time. Also Pharmexcil would provide data wherever

required. For this DoP should fund a study/ survey to be conducted by Industry

Associations / other institutions to ascertain details of units manufacturing bulk drugs

and formulations. In this regard it was also decided that CIPI will collect requisite details

from Northern region, IDMA from the Western region and BDMA from the Southern

region and provide the details to the department on priority basis. CIPI will also provide

details of units located in excise-free area to DoP after collecting requisite details from

their member units.

In any case, the Group while assessing the action plan for the growth of SME sector,

uniformly agreed that presently the total production of drugs in the country is about US $

20 billion. DoP is targeting to grow the industry to US $ 100 billion by 2020. The SME

sector is also doing contract manufacturing for large MNCs and large Indian Pharma

companies. This shows the potential of the SMEs and accordingly DoP is targeting that

the SME Pharma should grow to a size of at least US $ 40 billion by 2020. Thus, a five-

fold increase has to be made in the growth of the SME sector in the next 10 years.

In this context, the milestones to be achieved for the 12th Plan could be as follows:

Upgradation to WHO-GMP standards of 1200 SME units by 2017 at the rate of

300 units per annum at the cost of Rs. 1200 crores of subsidy either as one time

capital subsidy or interest-based subsidy

Upgradation to US FDA/EDQM/TGA and other International Standards of 250

units by 2017 at the rate of 50 units per annum at the cost of Rs. 2 crores per

unit and a total cost of Rs. 500 crores.

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Training of 5000 Working Professionals in WHO-GMP and other International

Standards GMP requirements by 2017 at the rate of 1000 professionals per

annum at a cost of Rs. 100 crores.

Setting up of one National and five Regional manufacturing standards training

centres at the total cost of Rs. 60 crores.

Setting up of one National and five Regional formulation development and

training centres as per International Standards at a cost of Rs. 100 crores.

Establishment and upgradation of 10 Pharma Growth Clusters by 2017 at the

rate of 2 per year with a per cluster cost of Rs. 50 crores and a total cost of Rs.

500 crores.

Total requirement of all allocations being Rs. 2460 crores.

As regards deletion/modification of existing schemes is concerned, there are no

schemes in the above areas being presently implemented by DoP. The CLCS Scheme

being implemented by MSME would need to be modified for SSI Pharma units with

appropriate budgetary allocations.

It was clearly recommended by the Sub Group that the task of the Department of

Pharmaceutical (DoP), Ministry of Chemicals & Fertilizers is to catalyze and

encourage quality, productivity and innovation in pharmaceutical sector and to

enable the Indian pharmaceutical industry to play a leading role in a competitive

global market. For this, world class quality manufacturing facilities with high level

of productivity with innovative capabilities are required. The recommendations of

the Sub-Group as above are expected to catalyse this process if they are

implemented in a time bound and purposeful manner.

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