Pharma SMEs in Crisis: Over 60% Risk Closure as GMP Deadline Looms 

More than 60% of India’s small and medium pharmaceutical enterprises (SMEs) face a potential shutdown by December 31, 2025, following non-compliance with revised Good Manufacturing Practice (GMP) norms under the Drugs and Cosmetic Act, as per news reports. 

Thousands of Drug Units at Risk Amid GMP Compliance Mandate 

India houses around 12,000 drug manufacturing units, of which 8,500 are classified as SMEs. Over 5,100 of these face closure since they are unlikely to upgrade facilities by the GMP compliance deadline mandated under the revised Schedule M norms. These SMEs collectively contribute about ₹75,000 crore to India’s domestic pharma market, estimated at ₹2,50,000 crore. 

The anticipated closures affect production of key medicines, including antibiotics, anti-diabetic drugs, painkillers, anti-hypertensives, and cold and cough medication. A significant volume of these drugs serves government supply programmes and exports to low and middle-income countries. 

Background to Schedule M Reform and SME Challenges 

The updated Schedule M regulations were notified in January 2022, enhancing quality standards for pharmaceutical production, such as recall mechanisms for defective products. While larger pharma firms with ₹250 crore-plus turnover had to comply by July 1, 2023, SMEs were granted an extension till January 1, 2024. This was later pushed to December 31, 2025. 

Despite this extension, many SMEs have not completed the necessary facility upgrades. According to industry representatives, these businesses often operate single units and are financially strained due to existing obligations like cash credit limits, making it difficult to invest further in compliance. 

Read More: Reliance Industries Chairman Mukesh Ambani Urges Stronger Domestic Capabilities in Key Industries! 

Regulatory Enforcement and Industry Appeal 

Enforcement action is looming as state drug regulators are instructed to submit monthly inspection reports to the Central Drugs Standard Control Organisation (CDSCO). The reports must include inspection findings and follow-up actions. Over 20 pharma associations have urged the government to delay enforcement, citing risks of medicine shortages and job losses. 

Despite the pharmaceutical sector’s concerns, the regulatory authorities have not yet revised their position on the compliance deadline. Executives fear that the unavailability of widely-used drugs could impact healthcare access, particularly in tier-II and tier-III cities. 

Conclusion 

Over 5,000 pharma SMEs in India may halt operations for failing to meet GMP norms within the December 31, 2025, deadline. This could disrupt supply chains for essential drugs and potentially affect exports and government-supported health programmes. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.