Usha Sharma – Mumbai
Department of Pharma-ceuticals (DoP) has requested comments on the latest version of the Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) designed for encouraging medium-sized pharma companies to upgrade to WHO-GMP standards by providing soft loans.
As per the new time bound soft loan scheme, eligible pharma medium-sized enterprises (Mes) will be provided a soft loan of upto Rs 2 crores per unit at a concessional rate of interest of five per cent per annum through Small Industries Development Bank of India (SIDBI) or any other financial institution, duly authorised by SIDBI.
With a corpus fund of Rs 500 crore, it is possible to extend the benefit to around 250 MEs in the 12th Plan period and around 400 MEs in the 13th Plan period out of the revolving fund generated through repayment of loans including interest earnings on the soft loan deposits, as per a detailed project report on the PTUAS.
Pradeep Yadav, Joint Secretary, DoP, while speaking to Express Pharma, said, “This will be like any other soft loan provided by the Government of India but it has been specifically designed for medium-sized pharma companies. We have asked all concerned people related to the pharma industry to share their views and comments. We would like to share the draft report with the Planning Commission, Government of India for review before the end of this month.”
He further said, “It is expected that the Planning Commission will take a minimum of three to four months to review the report and we hope to launch this scheme before the end of this year.”
SIDBI will be borrowing the corpus amount from the Government of India without any interest and will be returning the loan amount after a period of 10 years in five equal annual installments.
As per the set criteria by DoP, companies with a turnover of Rs 5 crores to Rs 10 crores will be eligible for the loan and need to repay the amount within five years of the disbursement procedure completion period.
Yadav emphasised the need for this loan scheme for medium-sized pharma companies and said, “Developing countries generally follow World Health Organization (WHO) GMP norms. Any export of drugs from India to such countries must adhere to these regulations and it is economically not feasible for medium-sized companies (to upgrade to these norms). It (the soft loan facility) will not be an extra burden to them but will provide better quality of drugs and encourage them to explore more export-oriented markets for better growth. This will also help them to meet with the efficacy requirements.”
Sharing some of his initial views on SIDBI’s proposed role, TS Jaishankar, Chairman, Confederation of Indian Pharmaceutical Industry (SME) pointed out, “Most pharma companies do not deal with SIDBI directly and in the past many other industries were not happy with their process. So, it will be better if the Government considers any nationalised bank as the eligible one for the process, which will be beneficial to the pharma companies.”
Jaishankar added, “WHO GMP is going to be mandatory for the approval process as manufacturing facilities should have WHO GMP compliance. The Government has identified the equipment and is ready to fund it under the soft loan scheme. Also, there needs to be a clause that the companies should avail this loan only when the companies are making profit in the last five-year period.”
As per information provided by the office of Deputy Director General (Chemical &Petro Chemical), dated 21.9.2011, on the basis of reports received from State Drug Controllers (SDCs), there were 752 MEs units functioning in India. Out of these, 153 MEs have got WHO-GMP certification from the office of Central Drug Standard and Control Organization (CDSCO) and State Licensing Authority. It is further projected that around 50 units may graduate from SSI pharmaceutical units to MEs during the 12th and 13th Five Year Plan (FYP) period.
Timeline to the PTUAS
The proposal has been in the discussion stage for a long period of time. It was during the 11th Plan period, that the DoP had submitted a scheme to the Planning Commission for providing financial assistance to pharma SMEs for technology upgradation to Schedule ‘M’ Standards as laid down under the Drugs & Cosmetics Rules, 1945.
The Planning Commission had accorded ‘in principle’ approval to this Scheme on 5.12.2007 and after various consultations this proposed scheme was tweaked/merged with the existing Credit Linked Capital Subsidy Scheme (CLCSS) of M/o MSME as per decision of Empowered Finance Committee (EFC) in a meeting held on 02.03.2009.
However, WHO-GMP and other international GMP compliance was found to be not practicable under the CLCSS Scheme as maximum loan available under this Scheme is Rs 1 crore per unit while the minimum financial requirement was reportedly Rs 2 crores per unit, as per a detailed project report on the PTUAS scheme.
DoP then proposed a new PTUAS to assist pharma MEs, which were not covered by the CLCSS Scheme of MSME. The new scheme provides soft loans at an interest rate of five per cent per annum for making these units WHO-GMP compliant.
The DoP circulated this modified PTUAS scheme on 15.6.2010 for comments to SIDBI, MSME, Ministry of Health & Family Welfare. This modified version was also circulated to the Planning Commission on 16.6.2010 for getting the ‘in principle’ approval.
The Planning Commission on 11.1.2012 advised the DoP that instead of the subsidy route, SIDBI could be approached directly by medium sized pharma units for a soft loan.
SIDBI submitted their comments on the Scheme on 10.12.2012 and proposed an Rs 500 crores interest free Corpus Fund to be kept with them for disbursement of loan to 250 MEs at the rate of Rs 2 crores per unit. These comments from SIDBI were submitted by the DoP to Planning Commission on 8.1.2013, The modified Scheme is the version finally being presented to industry for its comments prior to getting the final nod from the Planning Commission.