There is no stopping the pharmaceutical and biotechnology industry in Gujarat, which from its glorious past is racing ahead by meeting the needs of era of outsourcing that has of late infused new life into the pharma and biotech industry world over. The pharma industry in Gujarat, which took off in 1907 with Alembic setting up its facility, is now a major contract research and manufacturing services (CRAMS) provider in India contributing significantly (more than $400 million as per various industry analysts) to the country's US $1.21 billion CRAMS market in 2007. The latest distinction as the favourite locale for outsourcing follows its stint as the major exporter of pharmaceuticals and producer of active pharmaceutical ingredients (APIs) in the country.
From the days that saw pharma and biotech industry making its path in the country, Gujarat has used its available resources to the best of its ability to propel the industry and in course of time came to be known as the pharma capital of India. In the process, Gujarat, the jewel of the West, became the first state in India to manufacture active pharmaceutical ingredients (APIs), finished dosage forms and pharmaceutical machineries. Also, as pharma and biotech industry slowly gained ground in the country, this jewel of the West earned the distinction of becoming the first state in the country to embark on preclinical safety and toxicology studies.
Now that pharma and biotech industry in India has established itself on the global market and multinational and foreign pharma companies are looking at the country for possible synergies. In tandem with the country's envious growth in this sector, Gujarat has also made its mark as global pharma hub, readying itself to live up to the expectations of the foreign and multinational pharma companies to vie as an outsourcing partner of choice, at a time when pharma industry is going through a sticky patch due to expiration of patents, lacklustre drug pipelines and spiralling costs of research and development, manufacturing and marketing.
When contacted industry sources, they pointed out that like many other segments of pharma business, in outsourcing too the state has got certain milestones to boast of. "The Gujarat pharmaceutical industry has carved out a special place for itself over a period of time. In fact, one of the early deals in the area of global contract manufacturing, the recent buzzword in the pharma industry, was accomplished in Gujarat way back in 1996. Hence, Gujarat is emerging a pioneer in this area too," said a leading pharma and biotech player in the state requesting anonymity due to certain technical reasons.
"Gujarat is home to approximately 40 per cent of contract research organisations (CROs) in the country. The state has witnessed action on outsourcing of clinical research activities and drug discovery related services. Globally, contract research is a high growth segment led by increasing outsourcing activities of multinational pharma companies. Gujarat is increasingly emerging as one of the most globally preferred outsourcing/off shoring destinations for pharma.
This trend can be largely attributed to Gujarat's inherent competencies in terms of low manufacturing cost, vast talent pool having excellent chemistry skills, strong support from ancillary industries and a favourable regulatory environment," added the industry player.
Agreeing that Gujarat has already emerged as an ideal pharma outsourcing destination, Hitesh Gajaria, sector head, pharmaceuticals, KPMG, said, "The state has a lot to offer in lines with the industry's requirement that includes good manufacturing infrastructure, skilled workforce and cost competitive advantages, apart from the regulatory support. Also, the existence of various pharma manufacturing clusters like the ones in Ahmedabad, Vadodara, Bharuch, Ankleshwar and Vapi / Valsad would further fuel the state's growth as an outsourcing destination."
He also indicated that Gujarat's established academic and research institutes and pharma manufacturing, packaging and chemical industries, coupled with factors such as backward linkages, large number of CROs, enhanced level of investment in R&D by local industry and IT capabilities would give it an edge as a preferred sourcing partner over other states in the country.
During its growth as a sourcing centre through CRAMS business, Gujarat has also developed its own strengths in different segments of pharma business. Referring to the competencies that Gujarat pharma industry hold in this outsourcing regime, I. A. Modi, chairman, Cadila Pharmaceuticals Ltd, said, "In the field of outsourcing, Gujarat has a great potentiality in tackling and development of problems in research and development (R&D). Gujarat can take up demand of new molecules either by manipulating the existing molecules or a total new molecule. In the case of therapeutic vaccines also, Gujarat can contribute needed potential adjuvant." He also said that in Gujarat, fairly a good number of clinical research organisations have come into existence to meet the international standards and they have successfully trained required technical staff. "One can say that CROs have come to the top gear line in the state," he added.
There is no doubt that Gujarat has progressed extremely well on the CRAMS front. The existence of cost competitive research base, technically qualified and skilled workforce and globally harmonised regulations complement the world class manufacturing infrastructure that it has. All this has helped Gujarat to emerge as the manufacturing and research hub of Indian pharmaceutical industry.
As far as contract manufacturing is concerned, Gujarat has WHO GMP complaint and internationally accredited manufacturing facilities to meet global demand. It has around 3,245 manufacturing licensees. When it comes to contract research front, the state houses CRO players like Lambda Therapeutics, Synchron, Clinsearch, B.A. Research and Veeda Research. Also, several companies like Cadlia Healthcare, Dishman Pharma and Jubilant Pharma are likely to set up special economic zones that would further enhance Gujarat's stand in the CRAMS space.
"Gujarat is definitely a fertile ground for CRAMS. A series of positive factors - world class infrastructure, skilled work force, low cost competitive advantage and GMP compliant manufacturing facilities and government support - makes Gujarat conducive for the contract manufacturing as well as contract research activities. Also Gujarat is having a well developed chemical and drug intermediates industry and hence various raw jmaterials required for running CRAMS process trials are readily available. The existence of a strong alliance with the allied industries, especially the chemical industry makes the state more promising in the CRAMS arena," noted Hitesh Gajaria of KPMG.
Export & APIs take a leap
However, the strides that the Gujarat pharma industry, which was worth around US $4.4 billion in 2005-06, is making is not limited to contract research and manufacturing services. The state is still batting as a major exporter of pharmaceuticals in the country with recent expert estimates putting the state's export growth rate at 20 to 25 per cent, at a time when the overall national export growth rate stands at 35 to 40 per cent.
Available figures indicate that the state's pharma export is worth Rs 5,000 crore, while its total production stands at between Rs 12,000 and Rs 14,000 crore. Gujarat manufactures and exports different dosage forms, including tablets, capsules, dry syrups, external application preparations, cytotoxic drugs, hormones, vaccines, small and large volume parentals, APIs and biopharma products. The pharma industry in Gujarat houses more than 3,000 registered manufacturers and the stringent implementation of current good manufacturing practices (cGMP) has enabled these players to meet the international parameters and the much needed fillip to the export business.
"The change in cGMP is concerned to small and medium units and it has really helped the good units to come up, while poor units went into oblivion. As far as the larger units are concerned they are achieving much more than the recognised cGMP norms laid by the drug authorities," noted I A Modi when asked how far the implementation of cGMP has changed the pharma manufacturing landscape in Gujarat.
Besides, in the wake of appreciating rupee, there was a unanimous move by the pharma players in this state to embrace EURO to save export revenue. "Exporters from Gujarat and other part of the country prefer to deal in EURO wherever possible. As far as import is concerned, the industry prefers transactions in dollars. Apart, several Gujarat-based companies have acquired fairly goon number of units in developing and developed countries, which has helped to bring more export business for pharmaceuticals," he added.
And when it comes to APIs and finished dosage forms, Gujarat pharma once again tops the chart in the country. In the words of I A Modi Gujarat has been the pharma hub of India since independence. "Today, 40 per cent of total pharmaceuticals production of the country is contributed by Gujarat. This ratio is even more in API segment." In what can be considered as a testimonial to the state's rich base of APIs, several multinational companies such as Wyeth, Sanofi-Aventis and Abbot have set up facilities in Gujarat to take advantage of the API edge it offers.
Hinting that Gujarat would hold the leadership position in manufacturing APIs and finished dosage forms, I A Modi of Cadila Pharmaceuticals said: "The existing research and development strength in APIs and formulations and development strength in finished dosage form are Gujarat's built up strengths and that has a lead over all the other competitors."
Endorsing a similar point of view, one of the industry players in the state said, "Gujarat has a 100 year legacy in the field of pharmaceuticals and it continues to be a leading contributor to the national output of drugs and pharmaceuticals. Successful vertical integration makes Gujarat-based pharma companies one of the competitive manufacturers in the world. It has adopted new technology and demonstrated capabilities in research, generic drugs and R&D and will leverage these strengths in the new patent era. All these would catapult Gujarat into a leader in APIs."
Rich opportunities
Though the pharmaceutical industry in this jewel of the West is faring well adopting to new and emerging business conditions and opportunities, all is not well with the industry. There are certain issues to be addressed. "The pharmaceutical industry has shown its strength in R&D at all levels, but unfortunately it is facing crisis for the enough funds for R&D activities due to redundant drug price control order (DPCO). In India, the market forces keep prices at the lowest and therefore I feel DPCO neither helps the consumer nor the industry. Hope the government becomes practical so that the funds are available for research activities," said, I A Modi.
Notwithstanding the factors working against the interests of the industry's growth, it offers a myriad of business opportunities to both the foreign and domestic pharma players. "Gujarat's growth story has been a phenomenal one, moving swiftly from its avatar as the pharma capital of the country, contributing over 40 per cent of the national output of pharmaceuticals, to global pharma hub," according to sources within the industry.
"Gujarat has a lot to offer to the pharma companies in India exploring newer avenues for growth such as the global generics market and contract manufacturing for international pharma companies. Always, Gujarat-based pharma companies have been quick to seize the advantage and encash these opportunities. The pharma companies in the state with their integrated capabilities, from concept to production, in API and finished dosage formulations and high skills in chemical synthesis and process engineering, all at competitive costs, are attractively placed to lead the way," the sources added.
In times to come, Gujarat-based pharma companies are expected to leverage some of the inherent advantages to create new growth avenues. The ability to deliver high quality products at low costs, meet the stringent compliance requirements of various regulatory agencies, abundant talent and skilled workforce would give it a distinct advantage, as pharma companies forge ahead with CRAMS.
"With companies investing in new chemical entities research, biopharmaceuticals, process research, proteomics, genomics, stem cell research and transgenic research, Gujarat is poised for further growth. Opportunities will abound in the areas of contract research and we would also see several alliances and tie-ups with global pharma majors for out licensing molecules," said an industry player.
Grooming bio industry
Backed by the proactive government policies, the biotech industry is expected to attain new heights in Gujarat. According to Hitesh Gajaria of KPMG, Gujarat with its rich bio-resource, strong reservoir of medical and marine resources, strong pharma and health care base is also well poised to grow in the biotechnology front. "Biotech industry in Gujarat today consists of more than 50 biotech companies and 66 support organisations. The present annual turnover in biotechnology in the state has been around US $150 to $175 million," he noted.
The thrust areas of Gujarat biotech industry include healthcare, pharmaceuticals, agriculture biotechnology, industrial enzymes, bioinformatics, contract research and marine and environmental biotechnology. The Gujarat government has proposed the development of various biotech zones that would act as enablers for the growth of this industry in Gujarat.
Gujarat is again a recombinant deoxyribonucleic acid (rDNA) hub with the presence of world class centres in companies like Zydus Cadila, Intas Biopharmaceuticals, Sun Pharma and Torrent Pharmaceuticals.
Of late, Gujarat has taken strong initiatives to develop bio-clusters based on intrinsic academic and entrepreneurial strengths. Key features of these clusters are - biotech parks, biotech policies, fiscal incentives like tax holidays, capital subsidies and energy concessions, centres of biotech excellence, specific biotech development funds and incubators. Gujarat is already providing funding support to biotech research. The state has developed a dedicated action plan for promoting biotech research wherein it has identified sector-specific facilities, and institution-specific facilities, which would be developed alone or through collaborative funding.
Explaining what went into the success of biotechnology in the state, Mani Iyer, Executive Director, Intas Biopharmaceuticals Ltd, said, "The government's response to regulatory and intellectual property rights issues, development of skilled resources as well as increased allocation of funds - with an emphasis on R&D in recent years - has made an important contribution towards strengthening the biotechnology sector."