While the domestic industry claims that the decision has no legal sanctity, experts say that several top notch Indian companies including Ranbaxy Laboratories, Dr Reddy's Laboratories, Cipla, Sun Pharmaceuticals, Wockhardt and Orchid may face a tough second quarter as they may be forced to sit on firm export orders running into several hundred crores.

Ironically, the ministry of health does not seem to have any problem with the importation of unapproved new drugs.

The ban, specifically applicable to the export of new molecules which are yet to be approved in India, would mean that drugs like pantoprazole (an anti-ulcerant), carvedilol (a cardiovascular drug), celecoxib (for arthritis), trovafloxacin (an anti-bacterial) and atervastatinand travastatin (both cholestrol reducers) cannot leave Indian shores.

What is worrying, industry experts say, is that many of these products may already be in various stages of production in some companies.

"Such stocks, general recession, coupled with irrational decisions like these may destabilise a relatively healthy domestic drug industry," they said.

Significantly, the domestic drug industry has found an unusual ally -- small and medium-sized international companies in advanced markets like the UK and US.

These overseas firms point out that even the stringent American drug laws (which advocate strong patent protection) permit the export of unapproved drugs.

The Indian government's decision would only be detrimental to the interests of the domestic industry.

The ministry's diktat, which has indirectly paralysed the domestic drug industry's process research efforts, also shuts the door to any new Indian entrant into the international sildenafil citrate (the key ingredient in Pfizer'santi-impotence wonder drug, Viagra) market.

The Indian pharma industry, say sources, has been exporting new molecules for several decades now and an arbitrary ban on this, without a proper explanation to industry, is strange.

"Just because there is no specific provision in the Drugs and Cosmetics Act on the export of new molecules, a ban on such exports cannot be justified. The move smacks of multinational pressure," they allege.

"It is almost like ushering in the product patent regime prematurely. As a last resort, industry may be forced to move court. But we hope that the need does not arise," another industry source added.

However, indications are that the ministry is examining the possibility of case-by-case approvals for specific export orders even as the entire matter has been referred to the law ministry. Based on the latter's views, a final decision on whether a separate provision/amendment needs to be incorporated in the existing laws will be made.