If the huge spending on expansion and upgradation activities is any indication, Indian pharmaceutical companies with its skilled manpower, quality products and services and market winning strategies are all set to make its mark in the regulated markets, apart from attracting huge investments for outsourcing activities. A recent Pharmabiz study of 25 Indian pharmaceutical companies has revealed that their capital work in progress has increased to Rs 2560.82 crore in 2006-07, up 41 per cent from Rs 1808.37 crore in the comparable period of the previous year. The study also found that a large chunk of this capital work was utilized for either upgrading or expanding of manufacturing facilities.
The study showed that domestic pharmaceutical companies like Biocon, Wockhardt, Cipla, Nicholas Piramal, Ipca Laboratories and Matrix Laboratories are engaged in relentless expansion activities. These companies have made huge investments to set up new manufacturing units that are GMP compliant and the expansion process is on.
With the drug controller general of India stringent on implementation of GMP norms, the expansion and upgradation of facilities in the country has taken a new dimension. In this context the terms - upgradation and expansion - simply mean, upgrading and/or expanding manufacturing facilities to meet GMP guidelines. This factor also answers why the Indian companies are making huge investments in this direction. However, the era of GMP has done a lot of good to the country's pharma industry. There is a rise in DMFs and ANDAs filings, apart from surge in export activities.
Also, with cost factors, workforce and government attitude working on its favour, research and development (R&D) activities in India have gained tremendous momentum. Recently, the pharmaceutical industry in the country has succeeded in getting enough government support to propel its R&D pipeline. Apart, backed by availability of skilled technical workers at lower costs and a 9 per cent year-over-year growth rate, the pharmaceutical industry in India is poised for rapid expansion. As a result, the country's pharmaceutical and healthcare market is witnessing a spurt of growth in its coverage, services and spending in public and private sectors. In addition, the healthcare market has opened a window of opportunities in the medical device field and has boosted clinical trials in India.
To add to the tempo of current growth of domestic pharmaceutical industry, the government has allotted more excise free zones. Most of the domestic companies are fleeing to new excise free areas like Sikkim and Baddi to take advantage of the tax sops. By setting up GMP compliant facilities at these excise free zones, the domestic pharma companies are preparing to expand their export activities into more regulated markets.
The pharmabiz study also found that the export activities of these 25 companies have taken a quantum leap of 37. 3 per cent in 2006-07 to Rs15,772 crore from Rs 11,488 crore in the corresponding period of the previous year. The factors that helped the domestic pharma companies to achieve this foot is the good image they built through higher filing of DMFs and ANDAs, approvals from US and European regulatory authorities, investments in latest technologies and increased focus on research and development.
The Ahmedabad-based Dishman Pharmaceuticals Ltd is learned to invest Rs 75 crore in its existing API facility at Bavla, Ahmedabad, Gujarat, which is a cGMP compliant one. The company is expected to commence the expansion at Bavla in the third quarter of 2007.
Referring to the company's expansion plans, a senior official of Dishman Pharmaceuticals said, "The company is expanding its Bavla unit capacity to 180 ton per annum from 70 plus ton. As for the financial matter, we have arranged a loan of around US $12.5 million. The rest of the money will be raised through internal accrual. The company is already in a long term supply agreement with Solvay Pharmaceutical and will continue to supply them. Apart from being a cGMP compliant one, the plant at Bavla also satisfies the US FDA requirements."
The Mumbai-based Ipca Lab is expected to invest around Rs 43.50 crore for the plant and machinery, apart from investing Rs 95 crore for setting up manufacturing units at different locations in the country.
The company has earmarked Rs 75 crore to set up two new API manufacturing facilities and laboratories at research and development centre, Ratlam, Madhya Pradesh. Its Ratlam project is expected to be completed by the end of November 2007. Also, the company would invest Rs 20 crore for upgrading its manufacturing facility and setting up new sterile vial filling injectables line at Dehradun. This expansion is expected to be commissioned by March 2008.
"The company has drawn a detailed plan of expansion activities for the next two years.
Currently, Ipca will invest Rs 70 crore to set up two new API facilities. Besides, the company would invest Rs 5 crore for setting up additional lab at our research and development centre. The proposed new API facilities would mainly focus on hydrocloroquinsulfate and metformin for anti-malaria and anti-diabetic segment. Every year the company is producing 10-12 new APIs for the domestic market," said, A K Jain, executive director, Ipca.
"The company is also putting up a new sterile vial filling injectables line at Dehradun with a total investment of Rs 20 crore. Ipca has chalked out the investment plan for next couples of years and will invest around Rs 70-90 crore every year. The company's major initiative will be towards active pharmaceutical ingredients (API) segments," he added.
Ipca is now concentrating on expanding its business activity in the CIS region. The company has developed a few new products in pain management segment to launch in the CIS countries by the end of October 2007.
As part of its expansion strategy, the Bangalore-based Biocon has recently invested Rs 357.98 crore for the plant and machinery. The company is committed to global excellence in research and manufacturing and its all facilities are designed in such a way as to meet the highest international regulatory and quality standards.
Earlier, in June 2006, with an initial investment of Rs 650 crore, Biocon rolled out Biocon Park - India's largest integrated biotech hub. This integrated biopharmaceutical hub incorporates state-of-the-art research laboratories, US FDA qualified fermentation based manufacturing plants and India's first antibody manufacturing facility.
The Mumbai-based Cipla, the third largest pharmaceutical company in India with net sales of Rs 3438 crore, has chalked out Rs 930 crore expansion plans for the next two years. The company is setting up manufacturing units at Sikkim, Goa and Indore. The expansion is likely to be completed by the end of 2008.
Speaking to Pharmabiz, Amar Lulla, CEO, Cipla, said, "The company has already finalised its expansion plans and would start construction activities by the end of this year. Cipla is investing Rs 350 crore to set up production and formulation unit for aerosols, tablets and capsules at Indore, Madhya Pradesh, Rs 180 crore for tablets, capsules, ointments and injectibles facility in Sikkim and Rs 400 crore for a SEZ in Goa.
The company is also likely to file 21-22 new ANDAs in the current financial year."
Cipla has significantly increased its capital expenditure on modernisation and expansion of existing units and to set up new facilities. Recently, it has invested Rs 170 core in a new export oriented unit at Patalganga for APIs and formulation. Apart from this, the company has also set up two new units for APIs and formulation in Bangalore and Kurkumbh. The company's most of the manufacturing facilities are internationally approved.
Apart, the company has recently bagged US FDA and WHO approval for its HIV triple fixed dose combinations, first of its sort in the world.
The company has filed over 100 DMFs for APIs with US FDA and 80 with Europe authorities. Many products are on the verge of approval, essentially in regulated markets.
The Mumbai-based Unichem Laboratories is setting up its manufacturing unit at Pitampur SEZ near Indore with an initial investment of around Rs 45 crore. The company has already bought land for the facility and the project is expected to be completed by early 2009.
"In view of the growth in the international business market, especially regulated market, the company is undertaking expansion. The company will put up a facility for the manufacture of finished dosage forms conforming to international regulatory standards. In this direction, the company has already been allotted 27 acre land in Pitampur SEZ near Indore," said, Prakash A Mody, chairman and managing director, Unichem.
"Unichem is stepping up research and development (R&D) expenditure in a bid to get recognised as research and discovery oriented company in the global arena. This will help us to achieve our long-term goal. The company has pushed up its R&D expenditure to Rs 22.83 crore from Rs 12.32 crore. This worked out to 4.1 per cent of total turnover, as compared to 2.6 per cent in the last year. Currently, the strength of the manpower is 150 in the R&D sector," he added.
The Mumbai-based Arch Pharmalabs Ltd has invested RS 60 crore to enhance its manufacturing capacity at Gurgaon. The company will invest Rs 40 crore in phase I. The expansion programme is expected to be over by the end of 2007. The rest of the amount will be utilized for phase II expansion of the same facility. Also, The company is setting up an isolated site for high potency suites for oncology segment.
Speaking to Pharmabiz, Ajit Kamath, chairman and managing director, Arch Pharmalab, said, "The company's expansion will take place in phase wise at Gurgaon. In phase I, the company is adding 300 kiloliter rector to the existing capacity of 75 kiloliter rector. In phase II expansion, Arch will further add 200-kiloliter reactor. So far, the company has filed six DMFs and is willing to file one DMF every month till the end of 2007."
Recently, the company has commissioned its new research and development facility at Taloja in Maharashtra. "This state-of-the-art facility is fully equipped with all required equipment and instruments. We are engaged in improving the cost for generics, filing DMFs and patents for non-infringing processes for various APIs that would go off patent in the next decade," Kamath said.