Though Pharmabiz had earlier pointed out that the new government has come out with policies which have been pending for several years and has also constituted several high-level committees to recommend policy changes to make pharma business simpler and easier in the country, the new government initiatives have not been able to boost pharmaceutical units in the northern states.
Explains BR Sikri, Co-Chairman, Federation of Pharma Entrepreneurs (FOPE),"There are no initiatives on behalf of the state governments as well as from central government to encourage pharma industry in northern part. Jammu and Sikkim are two areas where industry is planning to set up units once the benefit in Himachal Pradesh and Uttarakhand is over. Some of the units in the above two regions have already been established and few more are planning to move. The two states of HP and Uttarakhand have become less attractive because in most of the cases excise benefits are over and in some cases it is going to be over either in 2015 or in 2016 and mostly in 2017. There will be hardly few units which will have benefit up to 2020.
At the same time with stagnant sales during last couple years on account of stringent actions by US FDA against major players, higher input costs, introduction of Drug Price Control Order (DPCO) and volatile exchange rates, North India listed pharmaceutical companies are facing a rough weather.
The major listed players having registered office in North India suffered a setback during last couple of years. The investors are getting lower returns from these companies in the form of dividend or market price movements. The share prices of all these companies, except Ranbaxy and Poly Medicure, are hitting the nadir.With sluggish final outcome, the market capitalisation of these companies has come down heavily on Bombay Stock Exchange (BSE), and institutional as well as retail investors lost heavily.
"There is no major policy framework or decision on behalf of the Government to take forward to boost the units in the Himalayas Pradesh and Uttarakhand. Moreover once GST is implemented then there will not be much attraction as all the places in India will have same policy", Sikri pointed out.
Majority of the units set up in Himachal Pradesh and Uttarakhand were from MSME segment. Other bigger units are not affected. But the smaller units have to face the challenge in years to come. Some of them have attempted to enter into domestic market. Some of them have tried to enter into propaganda cum distribution segment and some of them have started attempting to enter into institutional business. Many of them, who are financially sound, are upgrading themselves for export to South East Asian countries and ROW and emerging market. The people who are not able to enter in any of the above area, will have no other choice except to close down their units, he added.
"Moreover MSME are under tremendous pressure because of implementation of Schedule M compliance, Schedule L compliance and now Government is talking about GDP i.e. Good Distribution Practice. Government may also consider in future Good Engineering Practice also resulting in huge investment which will directly or indirectly affect the financial health of MSME and they will be compelled to close down', he said.
Talking about the bulk drugs industry , he said though the Government of India is going to announce a policy very soon, HP and Uttarakhand will not be covered for bulk drug industry because of environmental issues. Only formulation units can be set up in the two hill states. The government may go for bulk drug industry only in those states where sea connectivity is available and where already petrochemicals units are established so that API industry do not have to depend for intermediate and chemicals from far away places.
For the bulk drugs industry, the government's preference will be to set up units where petrochemicals industry is well established and where sea ports are nearby. Therefore, chances of API industry coming in Northern India is a distant idea.
However, he opined that fermentation industry could be set up in HP and Uttarakhand because fermentation industry needs plenty of power, water and cold climate to maintain the humidity for which these states are offer suitable environment.
Since currently India is dependent for more than 65 to 70 per cent on China for many fermentation based products, it is high time for the Government to consider setting up fermentation based products in India, further adding that HP and Uttarakhand could be the best choice from technical point of view.
At the same time with the Prime Minister of India, Narendra Modi's campaign for ‘Make in India’ and initiatives to attract foreign and domestic investments in areas of innovation and discoveries, some of the industry observers are hopeful of encouraging steps in the days ahead by the central and state governments to propel the north Indian pharma industry on the growth trajectory.
Industry leaders are optimistic that with ‘Make in India’ initiative, India will definitely become the global hub for pharmaceutical manufacturing. The pharma sector in the North can also take advantage of this initiative by cashing in on the upcoming opportunities, they opine.