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The pharmaceutical manufacturing sector in Kerala is facing an existential crisis, with the state’s remaining small-scale units on the verge of total collapse and expecting closure notices from the Government of India at any time for non-compliance with new mandates.
Despite Kerala ranking second in India for medicine consumption, the local industry has been left to wither, a situation Purushothaman Namputhiri, president of the Kerala Pharmaceutical Manufacturers Association (KPMA), attributes to a critical lack of government support.
In a telephonic conversation with Pharmabiz, Namputhiri stated that despite submitting numerous memorandums to the government over the last decade, the industry has received zero financial support or policy assistance, leaving local manufacturers vulnerable to market fluctuations and changing compliance mandates. The situation has reached a breaking point with the union government's enforcement of the revised Good Manufacturing Practices (GMP) under 'Schedule M'. The deadline for compliance was on January 1 of this year, and the industry is now facing imminent closure notices or joint inspections by regulatory authorities. Out of the 15 operational companies left in the state, only four are currently in compliance with the new norms. While the remaining MSME units are willing to modernize, they are financially paralyzed. KPMA estimates that each firm requires at least Rs. 10 crore to upgrade their facilities to meet the rigorous new standards.
Without an immediate government-sponsored revival package, the once-thriving sector, which previously boasted of over 90 active companies, may vanish entirely. The high cost of compliance, combined with rising production expenses and competition from marketing companies and pharma majors, has made it impossible for small firms to survive independently. This decline is also a major concern for the pharmacy education sector, as local students must now travel to other states for their mandatory industrial training. Kerala has 56 pharmacy colleges conducting D Pharm and B Pharm courses.
Talking on this issue, some senior faculty members told Pharmabiz that the Kerala Pharmacy Graduates Association (KPGA) has attempted to counter this decline by drafting a strategic plan to revive over 100 defunct units through the establishment of government-supported pharma parks and subsidies. By advocating for these specialized clusters and international quality certifications, the KPGA aims to curb the mass migration of pharmacists to north India.
Although the state consumes medications worth approximately Rs. 10,000 crore annually, local production currently accounts for less than 1.5 per cent of that demand. To bridge this gap, industry leaders have proposed specialized clusters for active pharmaceutical ingredients (APIs) and key starting materials (KSMs), arguing that such a move would make the state self-sufficient and capitalize on Kerala’s burgeoning medical tourism sector.
According to Namputhiri, a significant contributor to this downturn is the emergence of large-scale marketing companies that favour sourcing medicines from tax-free hubs like Sikkim or Himachal Pradesh rather than local SMEs. Over the last decade, local production has dropped by 50 per cent as several manufacturers, unable to afford technology upgrades or skilled labour, have abandoned production to become mere marketing tie-ups for north Indian firms. This shift has not only weakened the local industrial base but has also opened the door for poor-quality and fake brands to infiltrate the Kerala market.
In a final effort to ensure the survival of the remaining MSMEs, the KPMA has reiterated its long-standing proposal for the "Kerala Generics" scheme, a project initially presented two years ago to guarantee purchase orders for local units. This revival of the proposal comes at a critical time, as the Kerala Medical Services Corporation (KMSCL) has not only reduced its local purchase preference from 100 per cent to 50 per cent but also continues to struggle with timely payments, leaving local firms burdened by large arrears. KPMA warns that unless the government finally heeds this proposal and addresses the payment delays, the industry and its representative body will soon cease to exist.
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