Cost Audit › Pharmaceuticals
Cost Audit for Pharmaceutical Companies: Lower Thresholds, Closer Scrutiny
Drugs and pharmaceuticals sit in the regulated sector table — meaning cost audit applies at a lower turnover than most manufacturing industries. Many pharma companies are covered sooner than they realize.
Overview
Why Pharma Faces Lower Cost Audit Thresholds
Drugs and pharmaceuticals are classified as a regulated sector under Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 — grouped with telecom, electricity and petroleum products. This means cost audit applies once overall turnover reaches ₹50 crore, with turnover from the specific drug or formulation reaching ₹25 crore, considerably lower than the ₹100 crore/₹35 crore thresholds most non-regulated manufacturers face.
Who Needs This
Which Pharma Companies Are Covered
Formulation manufacturers
Bulk drug/API producers
Biopharma companies
Foreign pharma subsidiaries
Regulated Sector Thresholds
Why Pharma Gets Covered Sooner
Regulated Sector Status
Grouped with telecom, electricity and petroleum under Rule 3
Per-Formulation Threshold
Applies at the individual drug or formulation level, not just company-wide
Why the lower threshold exists
Pharmaceuticals are treated as a regulated sector because of their direct link to public health pricing and essential drug availability, which is why the applicability bar sits lower than for general manufacturing.
Why It Matters
Why This Matters for Pharma Companies Specifically
Avoid falling behind schedule
Lower thresholds mean many pharma companies are covered earlier than expected.
Formulation-level cost clarity
Per-drug costing supports pricing decisions under margin pressure.
API/bulk drug cost tracking
Raw material cost volatility is captured accurately in cost records.
Regulatory-readiness
A clean cost audit trail supports broader regulatory and pricing scrutiny.
Batch-level inventory accuracy
Inventory valuation is tracked consistently across production batches.
Cross-border consistency
Foreign pharma subsidiaries get the same rule-based assessment.
How It Works
Our Process for Pharmaceutical Cost Audits
Built around formulation-level costing and regulated-sector timelines.
Start My Pharma AuditRegulated sector confirmation
We confirm your products fall within the drugs and pharmaceuticals category under Rule 3.
Threshold testing
Overall and per-formulation turnover are tested against the ₹50cr/₹25cr thresholds.
Batch cost records review
Cost records are reviewed at the batch and formulation level.
Cost audit execution
The audit is carried out per formulation, consistent with Cost Accounting Standards.
CRA-3 / CRA-4 filing
The report is finalized and filed with the MCA within statutory timelines.
Before You Start
Documents We Need From Pharma Companies
Formulation-wise cost data
Batch production records
Financial statements
Raw material/API purchase data
Sector Coverage
Industries We Serve
Why SSCOIndia
Why Pharma Companies Choose SSCOIndia
ICMAI Cost Accountants
Written compliance position
Fast, no-obligation review
PAN India, foreign entities too
Questions
Frequently Asked Questions
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