Over the last 3 decades the Indian pharmaceutical industry has transmuted into a world leader in formulating prominent generic drugs. Indian pharmaceutical products are exported to 200 plus countries around the world including highly regulated markets of USA, Europe, Japan and Australia.

India’s pharmaceutical industry consists of large, a number of medium and small enterprises, is one of the world’s most cost competitive industries. It is also extremely fragmented with 25,000 Plus domestic manufacturing units.

35 years of protection has switched the Indian pharmaceutical industry to everlasting scientific and manufacturing potentialities, permitting many of its leading companies to spring up the value added string in the space.

The Role

In India, Small and Medium Enterprises (SMEs) are classified as per the Micro, Small and Medium Enterprises Development Act, 2006. Enterprises are divided into small, medium,large units on the basis of investment made in the facilities.

With the pattern of determining SMEs under multiple criteria, many times the role played by the SME sector in a developed or emerging economy does not get sufficient importance. The key indicators that define the economic successfulness of any (developed or emerging) country, such as poverty alleviation, ever so-increasing employment opportunities, accessibility of several items of daily use and etc.,often than not provided by the SMEs. This has ensued in the large enterprises making up on their own by an intensely competitory SME sector.

SMEs associate ownership of their competitive edge to their ability to take faster decisions, ability to produce innovative products to furnish the specific regions needs. SMEs have got came forth as a vibrant mark of the economic system as they have already taken on as key aid to the country’s Gross Domestic Product (GDP).

The Planning Commission is seeming in to the current policies and is looking at the required changes to make SMEs more active to reach greater economic goals. Understanding the grandness of SMEs, the central government has plans to carry out a national schemes for manufacturing sectors, that are depicted by the National Manufacturing Competitiveness Council (NMCC). This positive turns will help SMEs achieve higher degrees of competitiveness and greater efficiency in their performances.

The future

With increasing drug patent expiration during the next 5 years, gradual decrease in new-product offerings and with increasing significance on the use of generic medicines in developed countries, the competition in the global pharmaceutical industry is set to get steeper. According to latest report from, A McKinsey & Co report says the value of the average patent expiry in 2010-15 would be $39.6 billion per annum.

Indian pharmaceutical companies will have a favorable role to play in this transmuting scenario, the medium and small players are anticipated to chalk out a influencing role for themselves. In spite of the decreased R&D investments, small and medium players will seem well marked to take on global challenge. Almost every Indian based top pharmaceutical firm will stand to get benefited by introducing generic forms. There is greater possibilities of more alliances amongst Indian, multinational pharmaceutical firms for producing, sourcing of generics and bulk formulations, which would then be sold in the emerging and developed markets”.

Various newer way of opportunities have come up for the SME sector. An emerging trend in these segments, has been evaluated to further engage in clinical trials, either on contract basis or on their own capabilities.

The Contract Research and Manufacturing Services (CRAMS) opportunities are also coming down to small and medium players who have got experienced and facilitated with norms of regulatory agencies. New product launches from the bigger players, helps the SME players to gain contracts for manufacturing also opportunities to supply Active Pharmaceutical Ingredients and pertained chemicals. Furthermore, a marketing approval of generic drug products provides opportunity to SME players to increase their drug product portfolio.

Challenges for SME

Outsourcing opportunities though huge, still there are higher rates of being acquired by major players with better economies of scale and constant quality delivery. With increased/growth competition has obliged huge capital investments in fixed assets and technology, which the SME's are finding difficult to withstand.

The key challenges faced by SME's include

• Attaining stricter quality norms
• Consistent Technical up gradation
• Marketing
• The pertinency of excise duty on the basis of maximum retail price (MRP)
• The other major factor that had impact on the development and growth of Indian SME units is the lot of MNC takeovers. The concern of Indian SME units that they will lose their growth opportunities and their current percentage in exports (40%) will be affected.