India’s MSME pharmaceutical manufacturers are facing mounting financial and operational pressure due to recent regulatory reforms, with many firms warning of declining profitability, delayed product launches, and even potential exit from contract manufacturing, recent report, Pharmaceutical Regulatory Impact Study – MSME India 2026 revealed.
The study was conducted by researchers Dr Tripti Aravind and Dr J Joseph Durai Selvam of CHRIST University, Bengaluru, and supported by the Federation of Pharma Entrepreneurs (FOPE), an industry body representing over 500 pharmaceutical companies in India.
The study surveyed 75 pharma manufacturing MSMEs and found that 92 per cent of respondents experienced production delays following pharmacopeial monograph revisions, while nearly 61 per cent said MSMEs are at risk of exiting contract manufacturing because of rising compliance costs.
According to the report, 25 per cent of firms reported overall production cost increases exceeding 20 per cent, while nearly 58 per cent said they were unable to pass on increased costs under DPCO 2013 price controls.
Quality control and testing emerged as the biggest cost driver, cited by over 70 per cent of respondents. Additional spending on analytical instruments, validation systems, digital compliance, and documentation infrastructure has significantly increased the financial burden on smaller manufacturers.
The report also found that more than 72 per cent of firms requiring GMP and GLP upgrades estimated capital expenditure above ₹2 crore, with some companies projecting investments beyond ₹20 crore.
Industry participants said the cumulative impact of regulatory changes is creating structural barriers for new entrants. Around 64 per cent of respondents stated that the new compliance environment significantly increases entry barriers for pharmaceutical start-ups.
Despite the concerns, the report acknowledged that stronger quality standards are necessary for improving global competitiveness and regulatory credibility. However, respondents stressed the need for implementation support, financial incentives, and phased compliance timelines to prevent disruption in the MSME pharmaceutical ecosystem.
The study recommended phased GMP/GLP implementation schedules, MSME-specific financial assistance, shared testing infrastructure, and revisions to DPCO pricing formulas to help firms absorb compliance costs without compromising business sustainability.