In a country where affordable medicines are the lifeline for millions, a silent crisis is brewing — one that could undermine access to essential drugs, destroy thousands of jobs, and disrupt the very backbone of India’s pharmaceutical ecosystem.
The reason? The implementation of the Revised Schedule M of the Drugs and Cosmetics Act, 1940 — a much-needed, yet challenging regulatory overhaul that is proving to be a double-edged sword for India’s MSME pharmaceutical sector.
Only 1,700 of 6,000 Units Have Complied: A Grim Warning
As of May 31st, 2025, only 1,700 out of an estimated 6,000 micro, small, and medium (MSME) pharma units had submitted their GMP upgradation plans as mandated by the government. The rest now stand at the edge of a regulatory cliff — facing shutdowns, stop-production notices, and possible license cancellations.
For an industry segment that supplies more than 40% of India’s domestic generic drug demand, this is not just a compliance issue. It’s a question of livelihood, survival, and national health security.
Revised Schedule M: Raising the Bar on Quality
The revised Schedule M, notified in 2023, is a progressive and long-overdue reform. It aims to bring India's pharmaceutical manufacturing standards on par with international benchmarks — especially WHO-GMP, USFDA, and MHRA expectations.
Key Upgrades Required:
Cleanroom classification with defined air change rates and pressure differentials
AHU (HVAC) zoning and filtration systems for contamination control
Enhanced documentation, data integrity, and audit trails
Microbiological and environmental monitoring protocols
Validated cleaning procedures and cross-contamination control
Strengthened QMS: change control, deviation handling, CAPA, training systems
These reforms are vital for ensuring drug safety, efficacy, and global credibility. As India aims to be a pharmaceutical superpower, embracing these GMP enhancements is non-negotiable.
The Cost of Compliance: A Heavy Burden for Small Players
But for most MSME pharma manufacturers, especially those in tier-2 and tier-3 cities, these upgrades come with crippling financial pressure. The cost of redesigning layouts, installing cleanrooms, qualifying equipment, upgrading utilities, and training personnel can run into crores of rupees — often beyond the capacity of small businesses.
Many of these units operate on razor-thin margins, supplying low-cost medicines to government hospitals, rural markets, and public health schemes. They serve not just as manufacturers, but as pillars of affordable healthcare in India.
Now, these very units — often family-run with decades of legacy — are being forced to choose between shutting shop or risking non-compliance.
Human Cost: Thousands of Jobs and Dreams at Risk
What does this mean on the ground?
Imagine a formulation unit in Baddi, or an antibiotic manufacturer in Aurangabad — each employing 100 to 200 workers, from pharmacists and QA officers to line operators and packagers. Now multiply that by 4,000 non-compliant units. We're looking at potential job loss for over 500,000 skilled and semi-skilled workers.
For many families, this isn’t just about income. It’s about dignity, pride, and stability. The ripple effect could reach suppliers, logistics companies, packaging vendors, and local economies.
Experts Sound the Alarm: Drug Shortages and Price Rise Looming
Industry experts warn that a strict clampdown could cause serious disruptions:
Shortage of critical medications such as antibiotics, anti-diabetics, and oncology drugs
Inflation in drug prices due to reduced supply and limited manufacturers
Loss of manufacturing capacity, which may push India to rely more on imports
At a time when the global healthcare ecosystem looks to India for affordable, high-quality generics, this domestic upheaval could weaken our position and raise questions about manufacturing sustainability.
The Government’s Role: Regulation With Compassion
The Ministry of Health has extended the deadline for Schedule M compliance for units with turnover under ₹250 crore until December 2024, subject to submission of an upgradation plan. This is a welcome step — but it may not be enough.
What India Needs Now is a Structured Handholding Mechanism:
Soft Loans and Subsidies
Offer low-interest credit or capital grants for infrastructure upgrades. This could be modeled on the PLI (Production Linked Incentive) scheme’s success.State-Level GMP Clusters
Establish shared cleanroom facilities and quality labs for MSMEs to reduce cost burdens through Pharma Parks.Dedicated GMP Cell in CDSCO
Create a central support cell to guide MSMEs in interpreting and implementing the revised norms.Tiered Implementation
Allow phased implementation with milestone-based reporting for smaller units, with audit leniency based on intent and progress.Training & Awareness Drives
Conduct mass training programs to educate plant heads, QA teams, and top management about modern GMP expectations.
A Wake-Up Call for the Industry Too
While the regulatory push is challenging, it's also an opportunity for the MSME pharma sector to reinvent itself, become globally competitive, and reduce the gap between compliance and conscience.
Quality should never be optional — but neither should support for those who want to comply.
Final Words: We Cannot Afford to Fail Our Small Pharma Heroes
India's MSME pharma units are more than manufacturers — they are healthcare warriors, producing life-saving medicines day after day, often with limited resources and maximum dedication.
If we let them fail, we not only risk losing manufacturing capacity — we risk the trust of millions of patients, the employment of hundreds of thousands, and the pharmaceutical future of our nation.
Let this not be the story of missed opportunities. Let it be one of collaborative transformation, where quality and compassion walk hand in hand.
Author
Rajesh Kapoor, Founder – PharmaHealth Insights
A GMP consultant with over 28 years of experience, Rajesh supports Indian Pharma industries in quality compliance, audit readiness, regulatory transformation, and sustainability solutions.
Disclaimer:
The views and opinions expressed in this blog are those of the author and are intended for informational and awareness purposes only. They do not constitute legal, regulatory, or professional advice. While every effort has been made to ensure accuracy, the information may not reflect the most current regulatory updates. Readers are encouraged to consult relevant authorities, consultants, or legal experts before making any decisions related to pharmaceutical compliance, business operations, or regulatory changes.
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