Several pharma SSIs in Telangana convert their production facilities into food supplements & Ayush drug production

Peethaambaran Kunnathoor, ChennaiWednesday, November 23, 2022, 08:00 Hrs  [IST]

Several small scale pharma manufacturing units (SSIs), once considered to be the growth accelerators of the pharmaceutical sector of the combined state of Andhra Pradesh, are now converting their facilities into food supplement production entities and others are shifting from allopathic segment of drug manufacturing to ayurvedic drug production.

In the last five years, over 50 companies have converted from allopathic to Ayush and food segments, and similar number units have closed down their facilities. As a result, the number of units under Telengana’s MSME sector has come down to 60, which was over 100 three years ago and was above one thousand 10 years ago, according to industry sources in Hyderabad.

The reasons cited for the transformation are financial constraints, failure in businesses, decreasing turnover and stringent regulatory norms.

They further said, in addition to conversion of production facilities and closure of units, there are some medium level companies who have turned into marketing after shifting their base from Telangana to the excise free zones in north Indian states. According to them, the migration has helped them to escape from regulatory hurdles and to avail benefits of the incentives being provided by the local governments there. Concerned about the future of the SSI units, they said the life expectancies of the existing few companies are continuing to shrink as their businesses are failing drastically and cannot move on with any viable plan.

Tata Rao, who was a once medium level industrialist with a good turnover, says that he stopped his pharmaceutical business and converted the facility to run another business. He categorically says that it is not possible to run a small scale pharmaceutical company today by complying with GMP and GLP norms. The income generated through business is not sufficient for meeting the requirements of the industry. Modern infrastructure, skilled manpower and good lab facilities are becoming major financial challenges to any small scale unit.  Similarly, huge expenses are required to purchase HPLC for the lab and the same quantum of money is needed to maintain the HPLC which is a crucial part in the laboratory setting of a pharmaceutical industry. Whether the industry is big or medium or small, the rules and regulations are the same and each company has to comply with them. These are the factors that forced the manufacturers to stop their operations in Telangana, he told Pharmabiz.

“Today’s problem is money for investment. The industry needs money to run their shows and that is what they lack. The revenue they are getting from their business is not sufficient to maintain the operation. Marketing needs huge investment, but the revenue is less than what is expected. if SSIs have to succeed the government must come up with some strategies involving financial help in the model of public-private-partnership (PPP), otherwise no small scale player can work in the present situation, not only in Telangana, but anywhere in the country,” Tata Rao opines.

Another industry captain and association leader Raja Mouli said, to run a company by complying with the provisions of the drugs and cosmetics act, the management has to appoint a minimum of 25 to 30 technical staff, for which the company has to spend Rs. 30-35 lakhs every month towards salary. As far as a small company with no revenue is concerned it is struggling and on the verge of collapse. He said no medium level company is working in Hyderabad at present, but there are some big players and a few SSIs.