Compliance or closure? India’s small pharma dilemma

 

India’s small pharma units are at a crossroads. As the country pushes to align its drug manufacturing standards with global benchmarks under the revised Schedule M, thousands of micro and small enterprises are struggling to keep up. What was intended as a quality upgrade for the sector is now threatening to wipe out its most crucial, yet vulnerable, segment. This piece explores why so many units are shutting down instead of complying, what the real costs could be for medicine access and employment, and whether the government is doing enough to support those caught in the middle of reform and survival.

A quiet storm is brewing in India’s pharmaceutical sector. Hundreds of small and micro drug manufacturers—many of them running for decades—are on the verge of shutting shop. The reason? A new set of regulations meant to raise the bar for medicine quality may be unintentionally forcing the smallest players out of the market.

At the heart of it is Schedule M, a section under the Drugs and Cosmetics Rules that lays down Good Manufacturing Practices (GMP)—essentially, quality benchmarks that every pharma unit must follow. Think proper sanitation, validated processes, safe storage, trained staff, and precise recordkeeping. Sounds fair, right?

The government updated these standards in 2023 to align with global norms. Large pharmaceutical companies had until June 2024 to comply. Smaller companies (those with less than ₹250 crore turnover) were given time till December 2025. But despite the extension, many say they simply can’t afford to keep up.

What’s changed in schedule M?

The revised norms aren’t just a minor tweak. They require major upgrades—both in terms of equipment and processes. Units now have to:

• Install air filtration systems and temperature-controlled rooms
• Use digital systems for quality checks and documentation
• Have dedicated zones for different drug formulations
• Meet international testing and packaging standards

These changes could cost anywhere between ₹2 crore and ₹10 crore per unit—an amount that’s out of reach for most micro and small enterprises.

What’s the fallout? Units are quietly shutting down

In places like Himachal Pradesh, often called India’s “pharma hub,” over 140 small units have already shut down in the past few months. Many of these were family-run businesses that made everyday medicines—painkillers, antibiotics, syrups, and more.

Industry insiders estimate that nearly 40% of India’s small and medium pharma companies are not in a position to comply with the revised norms, despite having until the end of 2025.

And this isn’t just about numbers. These units:

• Supply affordable medicines to Tier 2, Tier 3 towns and rural areas
• Employ thousands of people locally
• Keep prices in check through competition

Their disappearance could mean higher medicine costs, job losses, and an over-reliance on big pharma players concentrated in metro cities.

Can’t they get help? There are schemes—but few takers

The government has tried to soften the blow. The Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) offers credit support for units that want to modernize. Another initiative, the Strengthening of Pharmaceutical Industry (SPI) scheme, aims to provide infrastructure and quality improvement support.

But as reported very few units have been able to access these benefits. The application processes are long, confusing, and often require upfront spending—something most MSMEs can’t afford without external help.

What the sector really needs, experts say, is:

• Simpler paperwork and faster approvals

• More awareness drives in smaller towns

• Hands-on technical help for compliance

• A more realistic timeline, at least until 2026

It’s easy to assume this is just an “industry” issue. But when you consider that MSMEs make up over 80% of India’s domestic drug production, the risk becomes clear. These are the manufacturers making the basic meds in your home, supplying your local chemist, and fulfilling hospital contracts across India.

Shutting them out—without giving them the tools to stay in—could create dangerous gaps in supply. It could also weaken India’s role as the world’s “pharmacy for the poor,” especially for low-income countries that depend on our generic exports.

What’s the way forward?

Nobody is questioning the importance of better quality standards. In fact, the new Schedule M is a step in the right direction if India wants to maintain its global credibility. But the real issue is how we get there.

If the goal is better medicines for everyone, then the journey must include everyone too—big companies and small players alike.

That means:

• More time
• More support
• And more listening

Because when regulation becomes a reason for survival anxiety, it’s not just the industry that suffers—it’s public health too.