The global recessionary wave has not yet impacted the Karnataka pharmaceutical sector. Even though there is apprehension about the pressure on margins and fierce competition, the companies are ready to address the volume game to increase profitability to the maximum. The companies have also chalked out cost optimization efforts to remain insulated during the global downturn.
When the global scene is tough and competitive, the industry has made its efforts to quickly expand production capacity to gear up for a volume game only to capitalize the cost advantage and be able to capture a dominant share in markets, Dr Premnath Shenoy, honorary secretary, Indian Pharmaceutical Association, Karnataka branch told Pharmabiz.
The 205 units in the State are already Schedule M compliant and many units have international regulatory compliance. These companies have helped the State to generate export sales of Rs 1,750 crore which is 6.5 percent of the total Indian pharma earnings from the international market estimated at Rs 29,000 crore ending December 2008.
Despite the prevailing gloom in the global markets, Karnataka pharma companies are looking to tap more opportunities. Through the Karnataka Pharmaceuticals & Drug Manufacturers' Association (KDPMA), prospects are being scouted to invite delegates from various countries to improve business relationships and increase prospects. There is also a need to proceed with the state government to send out joint delegations abroad, stated Dr Shenoy.
Although the global scenario is posing as a huge challenge, companies have made strategic investments to maximize their revenues from the domestic market. The global trend has not impacted us because we are both cautious and competitive, stated Jatish N Seth, secretary, Karnataka Drugs & Pharmaceutical Manufacturers Association.
According to Shailesh Siroya, managing director, Bal Pharma, a company which invested in Baddi, has no regrets of its unit despite the reverse decision in excise duty by the Union government. There is a market both in India and internationally. Therefore a new plant can only help boost volumes, he added.
The state accounts for 40 per cent of the total contract manufacture business in the country. All of this is generated out of the internationally compliant plants which are approved by US FDA, MHRA (UK), TGA (Australia), MCC (South Africa), ANAVISA (Brazil) and MPA (Sweden).
Karnataka is a much-sought after destination for large multinational companies to outsource their products. In fact nine of the top 10 companies in India outsource production from here. These units manufacture four of the top 10 brands.
For maintaining the standards of excellence in quality, batch consistency is a challenge. Now with the US FDA looking at an India office, surprise and stringent inspections are on the cards. Karnataka units are armed for such unexpected checks, just as they remain insulated during global recession, averred Dr Shenoy.