Small firms dominate the Indian pharmaceutical industry with significant contribution
to the national drug production and employment. They had played an important role
in enhancing domestic technological capabilities in drugs production and have been
instrumental in keeping drugs prices affordable for the Indian populace in remote
rural areas. This rise of small firms in this sector has been facilitated by a set of
strategic government polices implemented in the past decades like adoption of a
process patent regime, relaxation granted from price control and industrial licensing
requirement, reservation of items for exclusive production and preference in
government procurement, etc. Since 1990s the regulatory regime for small firms
underwent dramatic changes with withdrawal of most of the favoruable policies and
implementation of regulations like a long-term product patent regime, withdrawal of
exemption from price controls, implementation of good manufacturing practices, etc.
These new policies have a number of implications for the survival and growth of small
pharmaceutical firms today.