Kozhikode: Government hospitals in Kerala may face a severe shortage of medicines in the upcoming financial year, starting April 1, as several pharmaceutical companies withdraw from drug distribution. This follows the Kerala Medical Services Corporation Limited (KMSCL) failing to honour its commitment to clear all pending payments to companies—dues that have accumulated over the past four years—by March 31.

Several companies have given notice of their withdrawal from the tender, citing the contractual provision that allows them to do so before the bids are opened.

Of the ₹600 crore owed to pharmaceutical companies that have supplied medicines since 2020, KMSCL has cleared only ₹150 crore. The corporation had promised to pay an additional ₹150 crore before March 31 this year and settle the remaining arrears by securing a loan from the Kerala Financial Corporation. Based on this assurance, 187 pharmaceutical firms submitted tenders in the second week of February for medicine supply in the upcoming financial year. These companies also completed their distribution of medicines in the third quarter of the current financial year.

However, authorities have taken no concrete steps to fulfil their promise of clearing the ₹150 crore dues. Moreover, with the government recently directing all departments not to submit any bills to the treasury after March 25, pharmaceutical companies do not expect their outstanding payments to be settled this financial year. Additionally, no announcement has been made regarding a government guarantee for the proposed loan from the Kerala Financial Corporation.

Meanwhile, the number of companies expressing interest in supplying medicines to Kerala is declining. While 216 pharmaceutical firms participated in the tender process last year, the number has dropped to 187 this year, with some now seeking to withdraw their bids. Major firms such as Johnson & Johnson, Baxter, Pfizer, Elure, Pentagon, Lotus Surgicals, and Haseeb Pharma have not submitted bids.

A decline in participating companies could drive up medicine prices. However, cancer drugs are expected to become more affordable due to a decrease in the cost of raw materials used in their production.