The Pharmaceutical sector in Karnataka is expected to grow significantly in the next decade with near total compliance to Schedule M and the positive response to the Patent Bill.

There are 240 pharmaceutical units in Karnataka. Some of the major companies include AstraZeneca Pharma India, Banner Pharma, Anglo French, Bal Pharma, Micro Labs, Karnataka Antibiotics & Pharmaceuticals Limited, Juggat Pharma, Wintac, Shrusthi, RL Fine Chemicals, Global Calicum, Natural Capsules and Resonance. All of them are scrambling for a piece of the ever-growing global pie.

The state is moving positively to face challenges of Schedule M and the Patent regime. Of the 240 units in Karnataka, 90 per cent of them are small-scale units and a mere 10 per cent are yet to comply with Schedule M, stated officials from the drugs control department. There is hardly any impact on the industry due to the revised notification of the Schedule M, which calls for exemption of ancillary area requirements, air handling systems and documentation of records.

"Karnataka is known for its quality production practices and is ranked on par or next to units from Maharashtra in drug standards and regularity compliance. A large portion of the small-scale units are headed by technocrats and are among the best managed units in the country with a significant presence in the global markets. Therefore, a near total compliance to Schedule M was possible because it was a conscious effort and not forced,'' stated Suresh Khanna, past president, Karnataka Drugs & Pharmaceuticals Manufacturing Association (KDPMA).

"By and large the industry in the State has been cautious and has planned well ahead keeping in mind the deadline for compliance. There have been strategic investments at the right time to avoid last-minute hassles. The sector is focussed and determined to be Schedule M compliant which is critical for survival," informed Mukund M Atre, general manager, (Technical), Anglo-French Drugs & Industries Ltd.

According to Atre, there are also limitations of space in the plants which are by themselves defective by design and have no scope for renovation. At this point of time they cannot think of relocation because of funds constraint.

"The units have been known for stringent regulatory enforcements and quality products. Global pharma companies have already approved some units for contract manufacture and have placed several repeat orders,'' N. Jatish Seth, secretary, KDPMA and director, Srushti Pharmaceuticals Pvt. Ltd.

The pharmaceutical industry in Karnataka contributes Rs. 350 crore in revenue to the State exchequer and provides employment for 12,000 people. Its growth rate is between 10-12 per cent as against the national pharma growth of 12-14 per cent. Pharma products worth Rs. 2,000 crore are produced annually, which is 10 per cent of the national production. The exports sales are Rs.850 crore which is 8 per cent of Indian exports.

"The main advantages of Karnataka's small-medium units are their visibility in national and international market, skilled workforce, capability to produce a wide spectrum of products such as bulk drugs, formulations, parenterals, soft-gel capsules and sustained release formulations," stated Ravi Shankar, CEO, India Operations, Strides Arcolabs and president, Karnataka Drugs and Pharmaceuticals Manufacturers Association (KDPMA).

The new patent regime is going to be a challenging time for Indian pharma sector as MNCs will try to dominate in a product patent regime. ``The focus will be on product development and contract manufacture. The challenge for the industry will be the survival of the fittest.

The timely implementation of Schedule M will ensure total cGMP (current Good Manufacturing Practices) where high levels of quality control and quality assurance standards will be maintained and all of which will be monitored by advanced software. Without substantial investments, it is difficult for the industry to exist and hence small-scale operations will be totally wiped out,'' informed Khanna.

Of the 240 drug units in the state, 70 have GMP certification as per WHO standards. More than half are engaged in contract manufacturing or in `job works'. Many MNCs in India have engaged at least one manufacturer or loan licencee from Karnataka: Medreich Sterilab Limited, Kemwell, Strides Arcolabs, Bentley Remington, Remidex Pharma and Sterling Labs, Wintac, BPRL etc. which have made a mark because of consistent quality and time line deliveries.

International pharma majors have preferred many companies from the State. When large companies offer their services on contractual basis to global MNCs, they want to outsource drug production for the domestic market from quality small-medium manufacturers in State. Here the small-medium units ideally fit into slot as third party manufacturers and serve as a major hubs for pharmaceutical outsourcing. In fact, two of Indian pharma sector's top five brands, are already outsourced from Karnataka. The units have been recognised for stringent regulatory enforcement and known to manufacture quality products.

Another added advantage favouring the State is that it is emerging as an investment destination. Between March 2003 and October 2004, it received 15 pharma-biotech- medical investment proposals worth Rs. 308.26 crore.

All the projects are coming up at Bommasandra in the outskirts of Bangalore, which has transformed into a hot bed for pharma investments in Karnataka in the last 8 months. The 15 new projects are scheduled for construction in early 2005 and would be ready for commissioning in the next 18-24 months.

The investments in the pharma sector has improved considerably in the state as compared to 2002 because of an improvement in the investment climate. Some of the top companies slated to set up their facilities here include Sigma Aldrich, a US-based life sciences and chemical specialist, Hexal Pharma a fully owned subsidiary of HEXAL AG, Austria, Cipla and Micro Labs. Micro has received clearance for two manufacturing plants at a total investment cost of Rs.64.30 crore, informed officials in the department of industry and commerce, government of Karnataka.