The Hindu Business Line : Small drug-makers protest Railways’ ‘discriminatory’ procurement

Mumbai, Aug. 23 Small drug manufacturers have urged the Indian Railways not to have “restrictive purchase policies” when it comes to buying medicines for its hospitals.

The Indian Railways is discriminating against small-scale drug companies through its decision to restrict the purchase of medicines only to those manufacturers who have a turnover of Rs 50 crore and above, said the Indian Drug Manufacturers’ Association (IDMA) in a letter to the Chairman of the Railway Board.

A decision to this effect was apparently taken by the Railways in March and it is expected to come into effect by mid-September, a small-scale drug manufacturer who sells to the Indian Railways told Business Line on conditions of anonymity.

In fact, similar issues have cropped up in the past with Steel Authority of India (SAIL) as well, and small drug-makers fear the trend is spreading to other Government-supported institutions, like the police force in some regions, who are also reportedly mulling similar restrictive criteria.

The quality of medicines being procured and the companies’ ability to deliver on time should be the criteria and not sales performance, said the drug manufacturers. And as done in the past, the Railways has the right to inspect facilities and products of companies which supply them medicines.

Even small drug companies have invested in putting up a place for good manufacturing practices, as laid out by the Centre, he pointed out. So, to stop sourcing from these companies could drive them into a struggle for survival, the small-scale drug manufacturer added.

Laying down sales turnover as criteria is not just “discriminating” against smaller manufacturers, it is also erroneous, he said. Big drug companies do much of their outsourcing from small and medium-sized companies, so it is wrong to think that small and medium-sized companies do not deliver quality goods, he said. There have been no quality concerns raised in the past, the drug manufacturer said, insisting that there was no reason for the sudden restrictive criteria against smaller drug-makers.

Different regions, like the Southern and Eastern Railway, seem to be gearing up to implement the criteria, forcing the IDMA to raise the concern with Indian Railways, an IDMA official said. Though precise details were not available, a drug-maker said that the contract of the Railways across the country could run into over Rs 100 crore. Drugs are sourced across therapeutic segments, from hypertensive and cardiac drugs to antibiotics, surgical products, injectables, etc, the drug-maker said.

Last month, the IDMA wrote to SAIL, too, on the steel-maker’s decision to restrict its purchase of medicines (in tablet forms) to the top 100 companies featuring in ORG’s rankings. SAIL is also restricting tender applications for injectables to the top 200 ORG-ranked manufacturers, they said. ORG rankings are based on retail sales and not product quality, IDMA said, asking SAIL to include all valid manufacturers when calling for tenders.

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