Karnataka pharmaceutical sector has been able to portray its resilience despite unsupportive issues like excise duty on MRP, investments in excise free zones and high attrition levels. The industry be it small, medium or large has been aggressively chalking out plans for global market forays in a scenario where the domestic market space is no longer proving to be lucrative or viable for survival.
"The kind of optimism shown by the small and medium enterprises to gear up and face stiff competition in the international market is remarkable. The units have been resourceful enough to prove their capability in terms of their expertise in manufacture and marketing bulk drugs, formulations, parenterals, soft-gel capsules and sustained release formulations,'' stated Jatish N Seth, secretary, KDPMA and director, Srushti Pharmaceuticals.
"Our units have always adhered to regulatory enforcements which had resulted in quality products. This has led global pharma majors to entrust their manufacture with many of the units in the state, stated Shailesh Siroya, managing director, Bal Pharma.
Karnataka pharmaceutical sector registered Rs. 3,300 crore turnover in September 2005. The sector contributes Rs. 450 crore in revenue to the state exchequer and provides employment for 15,000 people. Its growth rate is between 8 per cent as against the national pharma growth of 10-12 per cent. The exports sales are Rs.1,100 crore which is 10 per cent of Indian exports.
Out of the 240 pharmaceutical units in Karnataka, at least 60 per cent have gone in for expansion and upgradation to grab a share of the global market opportunities. These include Micro Labs, with the highest turnover Rs. 688 crore which received approvals from USFDA, MCC-South Africa, Health Canada, Invima Colombia. Medreich Sterilab's four certified plants by the UK MHRA, TGA Australia and South Africa MCC. Strides Arcolab, the world's top 5 soft gel capsule manufacturers with plants in India, U.S.A, Brazil, Mexico, Poland and Turkey all conforming to WHO's cGMP and tow USFDA approved units.
The company also made global strategic acquisitions and joint venture initiatives this year. AstraZeneca is also getting ready to commission its state-of-the art process research and development laboratory in November 2006 which is coming up at an investment of US$11.9 million.
The Bommasandra Industrial Area in the outskirts of Bangalore on Hosur Road is transforming into a pharmaceutical hub, stated sources from Karnataka Udyog Mitra, the single window agency cleared the investment proposals. There are a over 30 companies slated to commission units by early 2007.
Between October 2004 and April 2006, Karnataka received investments worth over Rs. 650 crore including two FIPB investments of Apotex Research Pvt. Ltd., which is part of the Canadian-based generic pharmaceuticals and drug research company and Hexal Pharma a fully owned subsidiary of Hexal AG, Austria.
In November 2005, Karnataka's former minister for industries and infrastructure PGR Sindhia under the 13th State Level Single Window Clearance Committee (SLSWCC) cleared six pharma projects at an investment of Rs 158.02 crore and expected to generate employment for 2,333 people. It also identified potential industrial development destinations like Mysore, Hassan, Rannebennur Taluk of Haveri district in north Karnataka and Kanakapura Taluk in Bangalore Rural district.
The state government has also set up a second Special Economic Zone (SEZ) at Hassan for multi purpose industries. Among the industries slated to set base here include Strides Arcolab in the pharma sector which is establishing a bulk drug facility at an investment of Rs 48 crore and expected to employ 180 people. UK-based Vitabiotics' Indian subsidiary located at Mumbai will invest Rs 19.70 crore for starting a formulation facility which is expected to offer 356 jobs.
According to Suresh Khanna, managing director, Dossier Solutions & Services Pvt. Ltd. and past president, KDPMA, the main attraction is that Karnataka and more so Bangalore is a one-stop shop for pharmaceuticals. Firstly, the companies located here have all the expertise in contract research, product development, manufacturing, regulatory and clinical trials for either bulk drugs or formulations. Secondly, the state is known for its stringent regulatory compliant environment thereby ensuring in-built quality systems.
Thirdly, there is a plethora of pharmacy educational institutes which provide abundant and regular supply of qualified technical manpower. Fourthly, the state's capability in software development is now supporting the pharmaceutical enterprises from production to quality control, packaging sales forecasting and clinical trials. Lastly, the comfortable weather conditions favour the setting of industries here. All these factors add on to making the state and particularly Bangalore the preferred pharmaceutical destination.
However, in the wake of all the fervour in the pharma space, VR Kannan, pharma consultant and former vice president, marketing, Bal Pharma is apprehensive about the scene and cautions that though it may not be threatening for the present it is definitely not encouraging in the long run going by the sales performances which is the critical component in revenue generation for companies.
Along with production resources companies need to invest in human resources. The high attrition rates in the sector currently pegged at 15 per cent is a serious factor that will hamper growth. The companies need to seriously reconsider the present remuneration packages and revise human resource policies.