The implementation of the revised Schedule M of the Drugs and Cosmetics Rules, 1945, is a landmark development for India’s pharmaceutical industry. Aimed at enhancing the quality of drug manufacturing practices and aligning them with international benchmarks, the revised Schedule M introduces a series of stringent standards. However, while these changes promise to bolster India’s reputation as the pharmacy of the world, they also pose significant challenges, especially for micro, small, and medium enterprises.
The revised Schedule M introduces transformative requirements for pharmaceutical manufacturing. These include the incorporation of a Pharmaceutical Quality System (PQS) which mandates producers to ensure product safety and efficacy through robust management systems. Senior management is now directly accountable for compliance with quality standards, emphasising a holistic, organisation-wide commitment to quality.
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Key provisions of revised Schedule M
The new norms also introduce quality risk management (QRM) which focuses on assessing, managing, and communicating risks to product quality. This scientific approach is designed to protect patient safety and ensure that the level of documentation and effort corresponds to the degree of risk.
Another critical provision is the Product Quality Review (PQR) which requires regular, periodic evaluations of all pharmaceutical products to ensure consistency and identify areas for improvement. These reviews, typically conducted annually, are expected to enhance operational reliability and product quality.
To support these standards, the revised Schedule M mandates the qualification and validation of equipment, ensuring that manufacturing facilities, processes, and utilities meet design specifications and perform as intended. Additionally, manufacturers must adopt computerised storage systems with robust controls to prevent data tampering and loss, while ensuring full traceability. These provisions are supported by comprehensive guidelines for managing changes in processes, addressing complaints, and initiating product recalls.
Implementation schedule and challenges
The revised norms categorise pharmaceutical manufacturers based on their turnover, with companies earning above Rs 250 crore required to comply within six months, and those below this threshold given 12 months. Recognising the unique challenges faced by MSMEs, the government recently announced a one-year extension for these units, pushing the deadline to December 31, 2025.
Despite the extension, compliance remains an uphill battle for many smaller units. Financial constraints are a major hurdle, as upgrading infrastructure, equipment, and documentation systems requires significant investment. While the Revamped Pharmaceuticals Technology Upgradation Assistance Scheme (RPTUAS) offers financial aid of up to Rs 2 crore per unit, delays in fund disbursement have left many manufacturers struggling to meet compliance costs. For MSMEs already operating on thin margins, this financial strain is compounded by limited access to affordable credit and collateral guarantees.
Human resource shortages further complicate compliance efforts. The revised standards require highly skilled personnel to manage new systems and processes, but MSMEs often lack the resources to hire and retain qualified staff. High attrition rates, which hover around 25-30%, exacerbate this issue, leaving companies ill-equipped to handle the technical demands of the revised Schedule M.
Additionally, the legacy infrastructure of many MSMEs is a significant impediment. Outdated facilities require costly overhauls to meet the new standards, with estimates suggesting that compliance costs for a medium-sized unit can exceed Rs 1-2 crore. Regulatory uncertainty also looms large, as recent inspections by drug regulators have led to stop-production notices for non-compliant units, creating apprehension among manufacturers.
Opportunities for growth and global competitiveness
While the revised norms present challenges, they also offer significant opportunities for India’s pharmaceutical industry. By aligning with global GMP standards, the industry can expand its presence in regulated markets, enhancing its competitiveness. This is particularly crucial as India seeks to capitalise on the $250 billion worth of drugs going off-patent globally over the next decade.
The emphasis on quality is expected to rebuild India’s reputation following recent quality concerns, such as the contamination of cough syrups linked to fatalities in Uzbekistan and Gambia. The integration of advanced technologies, such as computerised systems for data management, is another step toward elevating operational efficiency and product safety.
Government initiatives, including the National Pharmaceutical Policy 2023 and training programs by the Indian Drug Manufacturers Association (IDMA) and Central Drugs Standard Control Organisation (CDSCO) are also playing a crucial role in easing the transition. These efforts aim to equip MSMEs with the skills and resources needed to comply with the revised standards while fostering a culture of quality and innovation.
Industry concerns and risks
Despite the potential benefits, industry stakeholders have raised concerns about the impact of the revised Schedule M on MSMEs. With more than 8,000 MSMEs operating in the pharmaceutical sector, many are at risk of closure if they fail to comply. This could disrupt India’s supply chain for affordable medicines, with significant repercussions for public health and employment.
The increased cost of compliance is another pressing issue. Industry analysts warn that manufacturers are likely to pass these costs on to consumers, potentially leading to higher drug prices and reduced accessibility to essential medicines. Additionally, the withdrawal of state licensing authorities’ power to clear export-only units has added procedural complexity, though it aims to ensure that export-quality drugs meet international standards.
The way ahead for pharma sector
To mitigate the risks associated with the revised Schedule M, stakeholders have called for a phased implementation approach. Industry associations have proposed a two-year extension for MSMEs to allow for a smoother transition. Financial assistance must also be expedited, with flexible loan schemes and faster disbursement of RPTUAS funds.
Training programmes and collaborative initiatives by regulatory bodies and industry associations will be essential in bridging skill gaps and addressing operational challenges. The government could also consider incentivising early adopters of GMP standards to encourage faster compliance.
A balanced approach is critical to ensuring that the revised Schedule M achieves its intended goals without jeopardising the survival of MSMEs. By addressing the financial, technical, and operational challenges faced by smaller units, the government and industry can work together to strengthen India’s pharmaceutical ecosystem.
The revised Schedule M represents a bold step towards improving the quality of pharmaceutical manufacturing in India. While the changes hold immense potential to enhance global competitiveness and rebuild trust in Indian-made medicines, their success depends on a collaborative and supportive approach. By addressing the unique challenges faced by MSMEs and fostering a culture of quality, India can position itself as a global leader in pharmaceutical manufacturing while ensuring the continued availability of affordable medicines.