New Indian government looks to help small players finance upgrades

Narendra Modi

FDA actions against Indian drug manufacturers have not gone unnoticed by the country's newly elected Prime Minister Narendra Modi, and he has a plan to do something about it.

A likely approach is a subsidy program for smaller manufacturers that don't have the cash holding that bigger companies enjoy, so have a hard time paying for new equipment, sources tell the Financial Press. The Small Industries Development Bank of India (SIDBI) is expected to be among the government institutions that will pitch in some financing.

"More than the top producers that are already cash rich, a financing scheme is likely to benefit small and medium sized businesses, that have to bear interest cost ranging from 12% to 18% depending on the source of funds," Ranjit Kapadia, senior vice president of Centrum Broking, tells the publication.

The U.S. FDA has expanded its inspection staff and stepped up its oversight of Indian drugmakers, which the FDA says account for about 40% of the generic and over-the-counter pharma products sold in the U.S. Ranbaxy Laboratories, India's largest generic drugmaker, along with Wockhardt, Sun Pharmaceutical and an Indian plant owned by Canada's Apotex, have all had import alerts issued against facilities which ban most, if not all, of the products they manufacture from being sold in the U.S. But smaller firms have not escaped notice. Warning letters have been sent to operations like active pharmaceutical manufacturing facilities operated by Smruthi Organics in Solapur and Canton Laboratories in Vadodara, India.

- read the Financial Press story