The pharmaceutical industry in Tamil Nadu, now in doldrums due to a host of issues, hopes that setting up of excise free zones and Special Economic Zones (SEZs) in the region could bail out the sector, apart from the State Government's committed efforts to help the industry in the state.

The Pharmaceutical Manufacturers Association (PMA) says that while the State government's decision to set up a pharma park for the first time in Tamil Nadu at Nanguneri, in Tirunelveli district as an SEZ will be a ray of hope for the industry, a centralized excise free zone will be a better option for the survival and growth of pharma industry in Tamil Nadu. The Association is backing its argument with the statistics of the industry in the past few years.

Around 40 to 50 companies from the state have shifted their operations to Himachal Pradesh and Pondicherry in the last one year, and another 30 to 40 percentage of manufacturers are facing closure due to the revised schedule M norms, which weakens the strength of the industry, which have a total number of 600 to 800 players in Tamil Nadu. Around 22 to 25 players from the state have shifted to Himachal Pradesh and around 30 companies to Pondicherry so far, notes the PMA.

The association suggests that Tamil Nadu could leverage much more from the industry, if the central government can offer an excise free zone in the state for all the southern states to balance the concessions in the northern states like Himachal Pradesh and Uttaranchal. An excise free zone in the state could attract around 200 companies readily to the state, which could catapult the industry in Tamil Nadu.

"The extension of concessions to the existing centralised excise free zones up to 2010 has added to the woes of small scale players all over the country. All the SSIs will be wiped out if the government is not coming up with some kind of aid to the companies in other states," said the spokesperson from PMA. He said that the concessions in these states have resulted in major focus shift of marketing companies in the segment and the companies engaged in production through contract manufacturing from Tamil Nadu.

The proposed Nanguneri Pharma Park cannot arrest the migration of industrial units, as the concessions for SEZ is more export oriented. This may not benefit most of the units in the state, which caters to the domestic market. But the decision announced by the new government in its first budget session shows that the authority is considering the needs and demands of the industry, added sources. They pointed out that though there were initiatives in 1996-97 for a pharma park, the first Pharma Park was announced only by 2006.

The 250-acre pharma park at Nanguneri, which can shelter around 40 to 50 large, medium and small scale pharmaceutical manufacturers and around 10 allied industries, is expected to provide 2,800 direct and 6,000 indirect jobs and is estimated to produce drugs worth Rs 500 crore per annum.

"The industry and the government should set their aim on an excise free zone rather than staying around the SEZ park for the betterment of the SSI sector in the state," commented S V Veeramani, Chairman, IDMA-SSI committee.

"The new pharma park and the measures taken to appoint a drug controller with pharma knowledge can be considered as a positive sign from the government. I personally feels that the industry in Tamil Nadu will have a bright time ahead if such measures are continued on a long run," says S Lakshminarayanan, secretary, PMA and the secretary of Alathur Pharmaceutical Manufacturers Association (APMA). APMA and PMA had been demanding to set up a pharma park in the back ward districts of Tamil Nadu for the past several years.

The SSI industry in the state also pins its hopes on the cluster development program - the Chennai Pharma Industrial Infrastructure Upgradation Company (CPIIUC), the Special Purpose Vehicle (SPV) floated by the pharmaceutical industry in Tamil Nadu to improve pharma infrastructure in the state. Some sources from the industry informed that the company is in talks with the Confederation of Indian Industry (CII) and Confederation of Indian Pharmaceutical Industry (CIPI) to join the project.

Sources also note that the industry has been relieved from procedural delays in obtaining license from the drug control authority, as a new drug controller (in-charge) has been taken charge from July 2006. The issuance of licenses, COPP certificates and other technical clearances from the Drug control authority were in deadlock for more than a year, causing inordinate delays for new pharma projects coming up in the state. Sources said some companies had to wait for more than six months for official clearance on some export orders to an unregulated market.

As the government is trying to address major issues like lack of drug controller and the pharma park, the PMA is going ahead with its demand for price preference in the drug procurement mechanism of the Tamil Nadu Medical Services Corporation Ltd (TNMSC), the state government's drug procurement agency for the public sector hospitals in the state.

At present, about 90% of the supply to TNMSC is from other states including Delhi and Gujarat while the manufacturers in Tamil Nadu are suffering due to various market reasons and policy matters. The Association's demand is to have purchase preference for local units, as TNMSC has been violating the tender rules to offer 15 percent price preference since 2002. Though the government has hinted issuance of purchase preference for the companies in Tamil Nadu informally, a final decision is yet to be announced, according to the sources.