Himachal Pharma Crisis: 400+ Units Face Closure as Schedule M Deadline Looms, Thousands of Jobs at Risk

Revised GMP Norms Require Rs 5-10 Crore Investment Per Unit; State That Produces “One in Three Drugs” Stares at Medicine Shortage and Mass Unemployment

Newsarc Bureau

SHIMLA — Himachal Pradesh’s pharmaceutical industry, which manufactures nearly one-third of India’s drugs, is facing an unprecedented existential crisis as the deadline to upgrade to revised Schedule M stipulations expires at the end of December, with the remaining 400 units working under existing rules supposed to upgrade or face closure.

The crisis threatens to trigger widespread unemployment and potential medicine shortages across the country, as the hill state’s pharma clusters in Baddi-Barotiwala-Nalagarh, Parwanoo, Kala Amb, Paonta Sahib, and Solan struggle to meet stringent new manufacturing standards.

The Scale of the Crisis

Out of 655 pharma units in Himachal Pradesh, 255 are WHO-GMP certified with international certifications like from the EU and USFDA, while the remaining 400 units working under existing Schedule M rules face potential closure. However, compliance rates have been alarmingly low.

Barely 122 of the 655 pharmaceutical firms have registered for upgrade, representing only 18 percent of units that have submitted their plan by the May deadline. This dismal compliance rate has raised serious questions about the survival of the state’s pharma sector.

Industry players warn that nearly 400 units in Himachal Pradesh may shut down if no relief is provided, with micro, small and medium firms contributing nearly 40 percent of India’s drug production. The association cautions that their collapse could lead to medicine prices skyrocketing and acute nationwide drug shortages.

Financial Burden Too Heavy

The primary obstacle facing manufacturers is the massive capital requirement. The Schedule M upgrade requires a minimum investment of Rs 5 crore to Rs 10 crore depending upon the size of the unit and operational cost, which can translate into minimum Rs 40 lakh to Rs 1 crore per month for fulfilling various regulatory parameters, according to Dr. Rajesh Gupta, President of the Himachal Drug Manufacturers Association (HDMA).

Smaller units unable to bear the huge financial liability ranging from Rs 5 crore to Rs 10 crore required for upgrade are heading for closure, with a pharma firm at Baddi already taken into possession by the State Bank of India and scheduled for auction.

The financial stress is compounded by existing debt burdens. Many manufacturers took loans during the COVID-19 period that remain unpaid, making fresh investments of this magnitude virtually impossible.

Space Constraints Compound the Problem

Beyond monetary challenges, structural limitations plague the industry. At least 100-150 pharmaceutical units operate from limited space with little scope for expansion, facing challenges in meeting key requirements like housing a water tank of one lakh litre capacity, setting up dedicated production areas for various products, and design and construction related parameters.

What the New Norms Demand

The revised Schedule M norms involve comprehensive overhauling of manufacturing paraphernalia including quality risk management, maintaining records that are attributable, legible, contemporaneous, original and accurate by validating electronic systems for documentation, conducting supplier audits, and upgrading facility and equipment validation to ensure production of safe and quality drugs meeting international quality parameters.

The new norms, aligned with WHO standards, are aimed at ensuring consistent production and quality control, product effectiveness, and curbing the menace of fake drugs.

Job Losses Already Mounting

The human cost of the crisis is becoming increasingly visible. In Kangra district alone, around 2,000 workers are at risk of losing their jobs, with nine units already shut in the district—four of seven units in Nurpur and five factories in Sansarpur Terrace, rendering over 700 workers jobless.

The Himachal Drug Manufacturers Association, representing more than 500 pharma entrepreneurs, has repeatedly sought extensions but has been denied. The industry had requested two years to upgrade facilities, but the government granted only a one-year conditional extension until December 31, 2025, contingent on submitting gap analysis plans.

National Context

The crisis in Himachal Pradesh mirrors a broader national challenge. India has around 10,500 pharmaceutical manufacturing units, of which nearly 8,500 fall under the MSME category, and around 2,000 already hold WHO-GMP certification.

Of the remaining 6,500 firms, only about 1,700 MSME pharmaceutical units—or 26.15 percent—have successfully submitted their gap analysis to secure extended timelines, according to industry experts.

States like Gujarat and Maharashtra have demonstrated better compliance, with Gujarat achieving a 98.8 percent submission rate. In contrast, Himachal Pradesh and Uttar Pradesh have significantly lagged.

Impact on Drug Availability

One of three drugs produced in the country is manufactured in Himachal in various industrial clusters, making the potential closures a national concern. The state produces medicines ranging from common cold remedies to cancer drugs, with exports valued at Rs 15,000 crore annually out of a total turnover of Rs 40,000 crore.

Industry experts warn that the closure of hundreds of MSME pharmaceutical units could create temporary supply disruptions, though larger manufacturers may eventually absorb the capacity. However, the transition period could see price increases and availability issues for several drug categories.

“Inspector Raj” Allegations

The owners of affected units blame the “inspector raj” and the sudden enforcement of revised Schedule M norms aligned with US standards for the crisis, arguing that compliance requirements are impractical for micro and small pharma firms to meet within the limited time frame.

The Himachal Pradesh Drug Manufacturers Association has stated that the “inspector raj” is spreading fear in the sector, adding that “this is not ease of doing business.”

Government Response Limited

Only around 180 units applied under the government’s revised pharmaceutical technical upgradation assistance scheme (RPTUAS), which offered financial incentives for MSME investments in upgradation. The limited uptake of government support schemes suggests either inadequate assistance or lack of awareness among manufacturers.

The Health Ministry has indicated it will not compromise on drug safety and will not extend the deadline further, with an official stating that while the government has supported willing manufacturers through waivers and incentives, many small manufacturers remain adamant about not upgrading.

Risk-based inspections are scheduled to begin in January 2026, which will identify non-compliant units for regulatory action.

The Road Ahead

As December 31, 2025 approaches, Himachal Pradesh’s pharmaceutical industry stands at a crossroads. The choice is stark: invest crores in upgrades to meet international standards or face closure and unemployment.

For an industry that has been the backbone of India’s generic drug manufacturing, contributing significantly to affordable healthcare both domestically and globally, the current crisis represents not just a business challenge but a public health concern with far-reaching implications for medicine availability and pricing across the country.

Industry representatives continue to advocate for additional time and financial support, while regulators insist that drug safety cannot be compromised. The coming months will determine whether India’s “pharma hub” can weather this storm or will witness a fundamental restructuring of its pharmaceutical landscape.