The health sector absorbs large amounts of labour, commodities and research and thus creates incomes, which in turn flow back into the economic cycle of our country, regions and the overall economy. SMEs are the main origins of innovation in the health sector, and are catalysts of growth and competitiveness. As such their needs must be considered when drawing up successful and regional policies for health and industry. This is the competence of regional/local public authorities providing health services and developing the sector in their regions. 

A generalisation would say SMEs base their business model around new ideas which are innovative to their target audience and larger shareholder-owned companies are driven by commercial product success and increasing market share. The small and medium enterprises (SMEs) are expected to play a significant role in the growth story of the country's pharmaceutical sector as they contribute 35-40 per cent to the industry in terms of production with a turnover of about Rs 35,000 Crore.

Ageing population, safeguarding a healthy workforce, and an emerging demand for quality and highly professional health services have boosted the significance of the health sector. The pharmaceutical and healthcare industry has always been notorious for merger and acquisition activities usually through a need to swell pipelines or technology enhancement. In terms of technology enhancement there are whole departments within large healthcare companies dedicated to identifying and strategically partnering, licensing with or acquiring SMEs. This SME acquisition model has become a popular source of innovation for some larger companies, who pick the SME from the free market tree once the technology is ripe. CPI assists in nurturing the technology by working in collaboration with SMEs and providing access to technology, finance, consultation and more. Making their technology ‘investment ready’ in shorter timescales.
Small and medium scale units have played a crucial role in the growth story of the Indian pharmaceutical industry and form an integral part of the sector.

What’s more, most SMEs are angel or venture capitalist backed and shorter development timescales provide an attractive environment for investment. Ideally, partnering occurs with healthcare SMEs when safety and efficacy of the new drug or technology has been proven. Of course, any acquisition is taken on a case-by-case basis and there’s no general formula, but some larger companies are moving towards being the eventual commercialisation centre for healthcare technologies and letting SMEs develop disruptive innovations before any partnering activities. This plays well with the SMEs as it dramatically enhances their chances of commercialisation success. Furthermore successfully selling a drug or technology to the healthcare industry is a different proposition compared to drug or technology development and navigating clinical trials; an area where the healthcare SME founders are stereotypically strong. Fostering complementary assets to sell their drugs or technologies will take years and time is not a luxury in the healthcare business with a relatively short patent protection window after approval.

In India, SMEs are mainly focusing on manufacturing and niche marketing. Contract Research and Manufacturing (CRAMs) and Biopharma have emerged as areas of high relevance to the MSME sector. It is recognised that the MSME units can effectively meet the two major public expectations viz. cost effective and affordable medicines of given framework of excellent manufacturing process, technology, regulatory compliance, distribution system and prices.
On export no focus.

On the export front, pharmaceutical SMEs in India have traditionally been less focussed on exports in comparison to large domestic firms. However, now they have become preferred partners for the supply of active pharmaceutical ingredients (APIs) and finished dosages for Indian as well as foreign pharmaceutical firms.

India has identified 40% SMEs that design and manufacture medical devices and diagnostic products. These companies face significant barriers that prevent them from reaching their potential. Specifically, we have found that SMEs have difficulty with product registration, reimbursement, procurement, distribution channels, health technology assessment and access to R&D incentives. Innovation in medical technology has the power to increase the efficiency and effectiveness of care, either by revolutionary steps in medical prevention, diagnosis and treatment, or by the application of innovative technology that is able to do more with less. Innovative technologies will provide country with more sustainable healthcare delivery and a more competitive industry, and because SMEs are such a vital source of such solutions, their needs must be taken into account when drawing up successful policies for health and industry.

Conclusion:  Big challenges have small and medium-sized solutions