SMEs oppose Pharma bar coding

The centre’s decision to make bar coding mandatory on all medical consignments  w.e.f Ist July has not gone down well  with small and medium-sized pharmaceutical companies, which account for 40 per cent of India’s total drug exports. Even though, it is aimed at skirmishing the problem of spurious drugs, the traders are not too happy as they fear this will increase the input costs of SMEs which will have an adverse impact on Indian exports of drug formulations to the highly competitive world markets.

Total exports of pharmaceuticals by SMEs are about Rs 20,000 crore. There are about 6,000 SMEs in the pharma industry, spread across the country.

 “The Director General of Foreign Trade (DGFT) order, which makes bar coding essential for exports from July 2011, should be withdrawn. If it isn’t, SMEs in the pharma industry will be wiped out from the formulations business. We are already facing tough competition from China, and with the guidelines in place, we fear that our exports will decline, as it will make products costlier,” SPIC (SME Pharma Industries Confederation) Secretary General Jagdeep Singh said.

A costly affair

The bar coding company appointed by the government agrees that bar codes cannot prevent fake or spurious drugs, arguing that they can be replicated more easily than credit cards. He said separate bar codes being mandated for every strip of tablets will add to the cost for manufacturers.

The cost of registration for each SME will be around Rs 20,000, besides which there will be recurring expenses of Rs 1 lakh per month for bar coding( including labour). Besides that, the installation of machines would require an investment of Rs 1 crore per packing line. This will increase the input cost and virtually hand over the export market to China or multinationals, to the loss of Indian SME exporters.

Surinder Singh, Drug Controller General of India, said, “The cost will not be too high as feared by the pharma companies. According to me, it will cost less than 30 paise per strip.” But manufacturers think that even 30 paise per strip is too high, citing the example of paracetamol tablets which are exported at Rs 1.50 for a strip of 10 tablets.

Indian Drug Manufacturers’ Association President N R Munjal said, "According to the Central Drugs Standard Control Organisation (CDSCO), the extent of spurious drugs in retail pharmacies is only 0.003 per cent, so I don’t think there is any need to implement bar coding. The move will definitely affect small pharma units, as they would need at least Rs 1 crore to set up one line for bar coding, besides other recurring expenses. The whole process needs computerisation, while currently SMEs have manual packing lines.”

IDMA is one of the oldest associations of pharma companies. It has 800 members, consisting of large, medium and small companies.