Genuine cos would not be harassed, black sheep should not be spared: Thakur Kaul Singh, Health Minister, HP

A ring side view of The North India Pharma Manufacturers Conclave, which saw a free exchange of views between senior regulators from both state and centre, and top manufacturers from Baddi’s pharma hub

Pharmaceutical companies from the North zone put up an impressive show of strength at the recently held North India Pharma Manufacturers Conclave. Presented by the Indian Drug Manufacturers Association (IDMA), Federation of Pharmaceutical Entrepreneurs (FOPE) and Express Pharma, the two-day conference and exhibition was held at Baddi, Himachal Pradesh (HP), which has evolved into one of the country’s biggest pharma manufacturing hubs.

The event brought together senior government officials from the centre and HP, IDMA and FOPE delegates comprising large to mid-sized pharma manufacturers. Leading Indian and international pharma equipment providers took the opportunity to showcase their products and services to a captive audience at the co-located exhibition.

The event started with the inauguration and tour of the exhibition by the Chief Guest Thakur Kaul Singh, Health Minister, HP and other senior regulatory officials from the centre and state.

Calling to attention the forum, BR Sikri, co-chairman, FOPE commenced the day’s proceedings by calling on Viveka Roychowdhury, Editor, Express Pharma to welcome the delegates. Wishing the delegates a fruitful two-days of networking, she also congratulated FOPE on completing a decade of service to the cause of MSME pharma companies, especially in the North region, and expressed confidence that they would continue their mission in the next decade as well.

In his address to the delegates, SV Veerramani, President, Indian Drug Manufacturers Association, thanked Express Pharma for taking the initiative to organise the event. In an overview of recent policy decisions, he advised SME players to not consider themselves at a disadvantage as they had already reached a level where they were at a substantial advantage. New players on the other hand, would have to grapple with getting as many as 41 approvals to start a manufacturing unit and set up infrastructure from scratch, giving established players a lead of around three years, which they should utilise judiciously.

Industry’s wish list

RC Juneja, Chairman, FOPE amplified the concerns of pharma manufacturers, emphasising that his company, Mankind Pharma and others, had made HP a pharma manufacturing hub, saying, “HP has given a lot to the pharma industry and vice versa.”

He stressed that the pharma sector is an employment generator but also needs support from the centre and states. He flagged issues like the increase in fees, loss of tax holiday status, etc. He suggested that on long drawn out issues like fixed dose combinations (FDCs), the government needs to find a solution so that no more money is spent on legal fees.

… and regulator’s (yard) stick

Countering many of the issues raised by Juneja, Navneet Marwaha, Drug Controller, HP raised cheers from the audience when he assured them that the state was, is and will be committed to producing safe and quality medicines. He thanked the companies who had chosen to make HP a pharma hub stating that eight of the top 10 pharma companies had manufacturing plants in the state.

Taking a firm stand, he said, “Cooperation would be given (to pharma companies) provided they manufacture quality drugs and keep away from making those which can be misused/abused as this is a social cause.“

Representing the Centre’s view, KB Agarwal, Additional Secretary, Ministry of Health & Family Welfare, Govt of India expressed his privilege to be present at such a gathering and gave an overview of the various actions being taken to increase the ease of doing business and to create an enabling environment. On a lighter note, taking a dig at the former speaker, but in tune with his message, he opined that the designation of ‘Drug Controller’ should be changed as it reflected negativism. He suggested that today’s reality is that the role requires a facilitator, comparing the role of a Drug Controller to that of a parent, who would always be disliked by children during the growing years. Only to be remembered more favourably in the later years, when the realisation will dawn that the control and discipline of the parent/ regulator contributed to the success.

As the Chief Guest of the inaugural session, Thakur Kaul Singh, Health Minister, HP, stole the show, with his heartfelt appreciation of the organisers for organising such an event as well as the delegates for putting his state on the map as an established pharma hub.

Reminding the audience that every third drug in the country was produced in HP, he expressed the hope that many more such events would be organised so that the Ministry and industry could work together for the betterment of the nation.

He reiterated that the HP government was committed to the manufacturing of quality drugs and assured the assembled manufacturers that they would get a patient hearing, as per the rules of law. Since he holds dual charge of the law ministry, it was only expected that he would send a warning note, saying, “The value of the human being is more than that of the pharma industry. Genuine manufacturers would not be harassed but black sheep should not be spared. There will be no compromise on quality but manufacturers should aim for quantity with quality.”

He advised pharma SMEs to focus on regional markets and niche products pointing out that 90 per cent of HP lives in the villages and thus affordable medicine is the goal. He also sought the assurance of manufacturers that 70 per cent of employees of their units based in HP should be Himachali. Signing off, he said that as HP was dev bhoomi, the pharma industry would continue to receive blessings in the‚ ‘abode of the gods.’

Giving the Vote of Thanks, Daara Patel, President , IDMA thanked Sikri for all his efforts towards making the event a success, “for perfecting the ‘art of asking’ on behalf of the SME pharma sector” and for being a very effective sutradhaar of the morning’s session.

The afternoon session had technical sessions by pharma companies and exhibitors.

Manoj Kumar, Head QA, Abbott informed the delegates of the latest revisions in GMP regulations. This was followed by presentations from exhibitors on products and services which would help growing manufacturers scale up smoothly, while taking care of their compliance needs.

While Jatin Bali, Assistant Manager, SSP informed the audience about process and zero liquid discharge technologies for pharma industries. Ashok Desikan, Director – Business Development, India & Saarc, Tyco Fire & Safety followed up with a presentation, complete with videos on actual usage, on integrated solutions to enhance fire safety and security in the pharma segment‘

Manish Mohindra, AVP – North Region, Domino Printech India’s session on coding solutions for product identification and serialisation was very interesting considering the recent move towards serialisation at all three levels of packaging.

The last technical session was on designing a GMP facility and monitoring the shop floor by Prakash Jha, Medicamen Biotech.

The presentations were followed by a live wire panel discussion on recent regulatory moves which have the industry up in arms. This session included topics like DPCO/ margin capping on generic-generic and branded – generic drug act amendments including licence fee hike/ FDC/ GST etc. The concerns were ably articulated by industry representatives like Juneja, Veeramani, Sikri, DC Jain, Chairman, Akums Drugs & Pharmaceuticals while Dr AK Pradhan, Deputy, DCG(I), Agarwal and Marwaha fielded the queries with the regulators’ perspective.

On FDCs

Industry experts at the event expressed serious concern about the chronic problem of FDCs which is hanging fire for almost nine years. They opined that they needed to go to court frequently and get relief. There are cases in Chennai, Haryana, HP and Nagpur High Courts and matter is becoming complicated day by day.

It was further deliberated that the court case of 294 FDCs pending in Chennai High Court since the last nine years had not been resolved and if that was the trend the industry representatives were anxious about the fate of more than 7000 applications.

Industry stalwarts like Sikri was a key person to take the lead to discuss this issue with Pradhan. He further mentioned that in the first sub committee of 294 FDCs, stake holders were members of that committee but for the latest FDCs, stakeholders are not involved.

Pradhan clarified that this committee is totally of experts and even CDSCO representatives have not been involved in this committee. Therefore, the question of industry involvement does not arise. However, he assured the gathering that due diligence will be maintained, industry will be given enough opportunity and government is seriously working to resolve this at the earliest taking patient’s safety into consideration.

On DPCO

Industry representatives made the point that in the last year, each official had a different interpretation of the DPCO 2013 Act, leading to implementation in ‘different draconian’ ways.

For example, the manufacturers alleged that if a mistake concerning a few paise was made, the concerned official could end up misrepresenting the case and award a huge penalty going into crores of rupees. This would force the manufacturer to resort to legal action and ultimately resulting in harassment.

Besides this, manufacturers opined that retrospective pricing in schedule products was impractical, again leading to litigation and being a great bottle neck for the SSI segment.

Similarly, industry representatives explained how the capping of margins is a retrogressive step. Few companies do not want to have a team of field force whose expenses amounts to 30-40 per cent of sales. This too is not a fixed amount, due to various labour laws and union problem.

Manufacturers pass on margins to the distribution channel to avoid all other expenses and labour problems. By capping margins the industry will be eliminated completely thus closing down manufacturers and lessening of employment in factories. This would in turn lead to a shortage of NLEM and other medicines in tier II and III areas.

Moreover, the proposal to cap margins in dosage form of tab and liquid per bottle and ointment, eye drops etc per pack has no rationale.

Representatives stressed that all the above issues impact the survival of the SSI and MSME segment and the government must act to save this section of the industry.

Impact of GST

Industry experts like Jain from Akums also highlighted how GST would be detrimental to the pharma companies in excise free zones, where they opine that the industry has survived because of MRP (Maximum retail Price)-based excise duty structure. After implementation of GST. It will be levied on sales value of i.e. on transaction value and not on MRP less abatement. Like other states, excise free zones will take input tax credit and pay applicable GST. It is doubtful that the government will give a refund even for value added tax; and even if refund is allowed, it would be a cumbersome procedure. Marketing companies would expect adjustment of possible refund from contract manufacturers in advance, whereas refunds would take time thus would affect the cash flow of the manufacturers.

As per Para 3.9 of the first discussion paper on ‘Goods & Services in India’ circulated by the Government of India in November 2009, exemptions and remissions under Special Industrial Area Schemes would continue up to legitimate expiry time both for the centre and the state; and these will be converted into cash refund scheme, after collection of taxes.

Promises given by Government of India under the new Industrial policy dated 07.01.2013 read with Excise Notifications 49 & 50 dated 10.06.2003 and as affirmed by Para 3.9 of First discussion paper on ‘Goods & Services in India’ are missing in ‘Goods & Services Tax Bill, 2016’ submitted by Government of India in the form of ‘Model GST Law.’ Refund Mechanism provided under ‘Model GST Law’ also does not provide any system of refund for excise free zones; though government officials orally still assure for such refunds.

These experts opine that IDMA and FOPE must make representation to the government to ensure that the benefits are incorporated into the new enactment. Once the old Acts are repealed without a saving clause in clear words in GST, the government will be helpless to give any benefit even through a notification.

Presently, the excise duty rate on raw materials (API) is 12.5 per cent and excise duty rate on pharmaceutical formulations (medicines) is six per cent. If the government categorises APIs under ‘standard’ GST Rate say 18 per cent and medicines under ‘Merit’ GST Rate say 12 per cent; then both the exporters and pharma manufacturers may have to put their shutter down and close their business. Exporters have been representing; and is the need of the industry that input tax rates and output tax rates are same.

The vote of thanks was given by Vinod Gupta, Co Chairman – FOPE & Vice Chairman – HDMA and Chairman – Meridian Medicare.

EP News Bureau – Mumbai