Bifurcation of the state of Andhra Pradesh into Telangana and Andhra will open up more growth opportunities for pharma and biotechnology sectors in both the regions, says Dr PV Appaji, director general, Pharmexcil.
Particularly in the residuary Andhra region which is having huge human resources potential and knowledge base along with financially sound entrepreneurs who are capable of building the industry right from the scratch, all combined can open growth opportunities for the pharma sector, provided, the central government gives them the needed push by giving tax exemptions and provide infrastructure facilities like land, water and power at subsidised rates, opined Dr Appaji.
Coming to the new state of Telangana, which will come into force from 2nd June 2014, already there are large concentrations of pharma and biotech companies well established in and around Hyderabad in the region. Now, with the unrest calming down, there are possibilities that new investors will be interested to invest as the state already has the well established and world class infrastructure.
But some industry experts are also of the view that if the central government gives a special status to the residuary Andhra Pradesh as in the case of Haryana and Uttaranchal, where they will be given full tax exemptions for a specific period, then there are chances that the pharma companies from the Telangana region may shift their bases to the Andhra region attracted by the special incentives. “Tax benefits are of course a major growth booster for the growth of a company. Tax exemptions and readymade infrastructure facilities will definitely speed up the industry’s growth,” said Dr. Appaji.
According to industry experts tax exemptions will account nearly 15 per cent of total production costs for a company, which is quite significant amount which will reflect in its profits.
Though the current situation for the pharma and biotech sector is in a confused state, the coming days will give a clear picture, as to whether the industry will witness a shift from Telangana to Andhra or remain stable, as all will depend on the policies of respective governments that will come in both the states.