Pharma firms to move court against CBEC notice

Pharma companies, which have set up new units in Uttarakhand and Himachal Pradesh taking the benefits of area-based exemptions, are growing restive over the issue of increasing their capacity or any change of formulations catering to the future demand of the market.

A general perception is that if the industry is being restricted from increasing its capacity and change the product mix as per the market requirement, it would lead to a negative growth, which in turn would affect quality, since formulations keep changing.

Ranbaxy, Elder Pharma, IPCA Laboratories and others had already started production in their new units.

The anxiety among pharma companies grew following a clarification of the Central Board of Excise and Customs that the companies cannot introduce new formulations on same machine. The Board said, “... if the commercial production of a particular kind of specified good has not commenced before March 31, 2010, then the benefit of the said notification (exemptions) would not be available for such goods. However, if the same product (which means the same formulations in case of pharma industry) is manufactured with the same machines but sold under a different brand name after March 31, then the benefit of the notification would be admissible.”

The Board said if the commercial production commenced before the expiry of the exemptions, then only the production and clearances of such drugs should be eligible for the benefits. After the new missive, most companies are now up in arms. “We would move the Supreme Court as the investments we made were heavy,” said president of the Drug Manufacturers’ Association Uttarakhand Pramod Kalani.