Pharma SMEs to benefit from proposed technology upgradation fund

The Central government recently announced plans to launch a Rs 500-crore Pharma Manufacturing Technology Upgradation Fund for small and medium enterprises (SMEs) in the pharmaceutical industry along the lines of a similar scheme (TUFS) for the textile industry. As per the Department of Pharmaceuticals, Ministry of Chemical & Fertilizers, only 15 per cent of domestic pharmaceutical manufacturers are making quality drugs of global standards, due to non-availability of funds.

CRISIL has analysed the performance of about 510 SMEs in the pharmaceutical sector which it rated during 2011-2015. The study revealed that the gearing (excluding promoter loans) of these enterprises remained low at 0.57 times, demonstrating the flexibility to borrow funds for upgradation of technology, if necessary.

Currently, however, only 20 per cent of these pharma SMEs have an international presence while the remaining 80 per cent are catering only to the domestic market. Moreover, these export-oriented SMEs recorded average sales of Rs 19 crore during 2013-14, while those catering to the domestic market only recorded average sales of Rs 13 crore.

 

CRISIL believes that technology upgradation by pharma SMEs would lead to increased compliance with Good Manufacturing Practices (GMP) and world standards. This would further enable SMEs to expand their presence in international markets.

Note: CRISIL has rated over 75,000 MSMEs in India. This fortnightly tracker presents to our readers insights on MSMEs, a key element of the Indian economy.