Pharmabiz
 

ANDHRA PRADESH: A pharma hub in the making

Anil MathewThursday, May 28, 2009, 08:00 Hrs  [IST]

Andhra Pradesh is fast turning out to be a better fertile land for the pharmaceutical industry as initiatives such as Jawaharlal Nehru Pharma City, Shapoorji Pallonji Biotech Park, ICICI Knowledge Park and other leading research and development centres have provided the much needed impetus for the global pharma to make huge investments in the state to cash in on the advantages it offers in drug making business front. Since Mumbai is gradually losing its sheen as the pharma hub, these projects are sure to give an upper hand to Andhra Pradesh over Gujarat, another Indian state that is competing to emerge as the pharma hub with its excellent infrastructure facilities and proactive government policies. The pharma and biotech parks and leading research and development centres are expected to change the pharma landscape in Andhra Pradesh, facilitating diversified activities in the drug development business area. "Mumbai used to be the hub for pharma traditionally, but it has reached its saturation point long back. Government of India has realised the same and started developing other states as well. As a result, Gujarat and Andhra Pradesh have captured the imagination of many players and the industry has started flourishing," said P V Ramprasad Reddy, chairman, Aurobindo Pharma to Pharmabiz. "Good infrastructure facilities, proactive state government policies, availability of trained manpower combined with the presence of leading research and development centers like Centre for Cellular and Molecular Biology (CCMB), Indian Institute of Chemical Technology (IICT), Centre for DNA Fingerprinting and Diagnostics (CDFD), National Institute of Nutrition (NIN) and Indian Institute of Life Sciences (IILS) make the state a better fertile land for pharma and biotech industry," he added. Apart from pharma city, biotech parks and leading research and development centers, Andhra Pradesh also has a strong academic base with 22 pharma degree colleges and 18 diploma colleges turning out about 2000 candidates annually. "One should start thinking in terms utilising these strengths to their fullest potential," said Ramprasad Reddy. When it comes to the introduction of modern facilities and parks in Andhra Pradesh, they are expected to re-position the state as a sought after destination for pharmaceuticals from start to finish and change the perceptions of the world for better. Earlier, to be specific pre 2005, Andhra Pradesh based pharma players were on the route of reverse engineering and hence were known as main source of bulk drugs. However, the scenario has changed and the state is now making palpable progress in biotech, new drug delivery systems and research and development. Also, Andhra pharma is witnessing more and more partnerships and outsourcing deals both in manufacturing and research and development fronts. "Earlier reverse engineering was main route and that's how Andhra Pradesh became main source of bulk drugs. However, post 2005, more and more partnerships and outsourcing are happening in both bulk drugs and research fronts," noted Y V G Krishna Rao, head, corporate finance, Gland Pharma. Expressing a similar point of view, P V Ramprasad Reddy said, "Andhra Pradesh was known as a bulk drug capitol as the business model of pharmaceuticals in the late 70s and 80s was mainly based on reverse engineering with which the pharma players could make money by quickly synthesising bulk actives after innovative / new chemical entities were launched in the world markets where patents were fully protected. The investment on research and development / innovation was almost negligible." Hinting that Andhra pharma has journeyed a long distance from its image as only a source of bulk drugs he added: "I must say that it was a phenomenal transformation for the industry to move up the value chain and to become one of the strongest with its entry into value added areas such as biotechnology, vaccines and new drug delivery systems which are technically so advanced. So, the sailing is good, but the pace can be increased further on the lines chosen to be the best." The major credit for the progress Andhra Pradesh is making in the pharmaceuticals business front goes to the state government, which extended its helping hand to set up pharma city and other facilities and parks in the state to grow its pharma industry. The pharma players in the state are of the opinion that the pharma city and biotech parks have played a dominant role in changing the pharma landscape in the state. In fact, the biotech park and pharma city have placed the state in a firm position to deliver environment friendly pharma manufacturing with world class standards. "As the Indian pharma giants have started putting significant resources on research, we must look at West and adopt the model they follow in large as well as smaller biotech and pharma contract research organisations. One such action is to encourage individual scientists to set up their own lab and do research in specific areas of individual competency, so that from a point commercial organisations outsource and fund the same and integrate into their research programmes. Shapoorji Pallonji Biotech Park and ICICI Knowledge Park are two such ventures aimed at these objectives. We will have a matured pharma landscape what we are proposing over a period," said, P V Ramprasad Reddy of Aurobindo Pharma. Asked whether Jawaharlal Nehru Pharma City is a call for Andhra pharma to shed its image as a bulk drug capital of India, he said: "There is a need to reposition Andhra Pradesh as a sought after locale for pharmaceuticals from start to finish and change the perceptions of the world for better. Jawaharlal Nehru Pharma City might be a starting point towards changing pharma landscape in Andhra Pradesh, but I would still recommend more such projects to come with state sponsoring and facilitating diversified activities in pharma landscape," he added. Endorsing a similar point, Y V G Krishna Rao of Gland Pharma quipped, "In a way biotech park and pharma city have absolutely gone a long way in taking Andhra pharma to next level of growth. Also, the infrastructure facilities in these park and city are giving multinational pharma companies a very good run for their money. As a result Andhra pharma has gained the acceptance of large pharma companies." EXPECTATIONS FAIL Though pharmaceutical industry in Andhra Pradesh is slowly but steadily gaining the acceptance of global pharma with its new business strategies, it is nowhere near the expectations placed on it in early 2000s. It was predicted that Andhra pharma would emerge as the next global hub of pharmaceuticals with a market share of around $8 to $10 billion by 2010. However, with around $2 billion in size, pharma industry in Andhra Pradesh has a long way to go to live up to the expectations built on it. "The Andhra pharma has a long distance to go to emerge as the next global hub of pharmaceuticals. Regulatory issues related to pollution, which has culminated in the ban of setting up active pharmaceutical ingredients (APIs) infrastructures in five districts of Andhra Pradesh (in and around Hyderabad) and failure to raise enough capital resources have all worked to impede the strides Andhra pharma was making in early 2000s," said, Y V G Krishna Rao, head, corporate finance, Gland Pharma Pvt. Ltd. "However, initiatives such as Jawaharlal Nehru Pharma City would spur the growth of Andhra pharma in days to come as it offers common effluent plants which would fuel the production of bulk drugs. Also, drug makers no more need to waste time on environmental clearance. The state needs several more such initiatives. When Indian pharma industry reaches a size of around $50 to $60 billion, we can expect the Andhra Pradesh to hold a market share of $10 billion," he added. However, expressing a different view point, P V Ramprasad Reddy, chairman, Aurobindo Pharma, said, "Andhra pharma plays a significant role in the country's overall economic development. The pharma industry performed well during October 2007 - March 2008 with production and sales growing by about 20 per cent over the comparative period in the last fiscal and exports rising by 10-15 per cent. May be you find a bit of slowing down in 2008-09, due to overall economic situation. Otherwise Andhra Pradesh is still on." "AP was ranked second in the country in terms of investment potential in 2006-07, according to RBI report. The state saw more than 100 projects across all sectors during the period. Pharma being one of the important sectors, as the state contributes one third of India's pharmaceutical output, it will surely meet the expectations in the coming years, say by 2015," he added. GOVERNMENT AID Since Andhra Pradesh has a large number of US Food and Drug Administration (FDA) approved facilities, some of the industry players feel that the state government should provide incentives to boost export to regulated markets like US and EU. "When units meet FDA norms, policies that would provide incentives to boost export to regulated markets would be morale boost for the drug houses here," noted, Y V G Krishna Rao of Gland Pharma. GROWTH DRIVERS "Co-working and partnering with multinational and other Indian pharma companies, contract research and manufacturing services (CRAMS) - strategy to meet the compelling demands of MNCs, gaining economies of scale and improving research efficiency, the competitive advantage of innovation to reflect on choosing the right business model, increasing purchasing power and increase in urban population, and privatisation of health insurance sector (which will accelerate per capita drug expenditure) would act as the growth drivers for Andhra pharma," said Ramprasad Reddy.

 
[Close]