It is quite common that industrial houses tend to flock together in specific locales. This trend is more so with firms belonging to the same industrial segments and those with more or less similar operating lines. Inevitably, such centres are soon transformed into major hubs of industrial activity.

India's newly emerging centres for pharmaceutical industry are also not a different story. Good infrastructure, easy availability of power, uninterrupted supply of water, better climes, and to top it all, incentives like duty exemptions and tax holidays power the Indian Pharma Inc to set sight on a couple of rapidly upcoming centres.

During the past few years several small, medium or even larger pharma players have shifted or partly relocated their manufacturing, formulations, processing operations to Baddi, Vizag, Uttaranchal, Jammu & Kashmir etc. And quite a number of companies from Maharashtra, Goa, Karnataka and Gujarat are in the process.

Baddi, in the Solon district of Himachal Pradesh has already received an investment of more than Rs 1,000 crore with 200 odd companies having selected this location for their future expansion. More than Rs 900 crore is being invested here by about 20 leading Indian pharmaceutical companies alone and all these projects are slated for commissioning before end of 2006, according to estimates.

Country's leading players including Sun Pharma, Zydus Cadila, Alkem, Lupin, Glenmark, Alembic, Unichem, Bal Pharma, Charak etc have started operation in Baddi. This would mean more than half of India's pharmaceutical production, mainly formulations, would originate from Himachal Pradesh in few years from now.

Similarly, there is Vizag in the southern part of the sub-continent. Jawaharlal Nehru Pharma City being set up at Parawada in Visakhapatnam is expected to be completed by April 2006. Situated 31 km south-west of Vizag city, the sprawling Rs 300 cr project is set to attract investments from leading pharmaceutical and biotech firms who are planning to start their operations in a year's time.

This Rs 300 cr project is being developed by Ramky Pharma City Pvt Ltd with a shareholding of 89 per cent and the state government holding the remaining 11 per cent shares.

One of the biggest pharma cities in Asia, the Visakhapatnam Pharma City is 1400 acres in area of which 1000 acres will be ready before April 2006. Of this, 850 acres had already been sold out, while 400 had been set apart for a "Special Economic Zone" for bulk drug manufacturing.

In J&K, at least half a dozen major firms have plans to set up units, including companies like Nestor, Lupin, Glenmark, Sun Pharma etc. The attractive incentives offered by J&K include 100 per cent subsidy for generators, 100 per cent subsidy for quality control equipment, cent per cent transportation subsidy to the nearest port or airport, registration fee waiver up to 90 per cent, input credit reimbursement etc. No wonder, if J & K replaces Baddi, HP, in a couple of years when it comes to the expansion interests of pharmaceutical companies.

The Finance Minister has, pending a detailed examinations of the incentives required to promote industrial development in the state, extended the deadline for 100 per cent tax exemption enjoyed by new industrial units in J&K from March 31, 2004 to March 31, 2005. He also said that the companies carrying out scientific research and development and approved by the Department of Scientific and Industrial Research before April 1, 2004 are entitled to 100 per cent deduction of profits for 10 years.

Also, the State of Uttaranchal also turns out to be a major lure for companies who want to escape from the rigours of the impending MRP-based levy regimes in the western and southern regions. Although the exact number of companies which have really come up to in various parts of the state like Haridwar and Dehradun is not available, the Uttaranchal state drug controller's office puts that there are 60 manufacturing licence holders and the state drug administration is waiting to see how many companies are really going to start operations from the state in the coming days.

However, pharmaceutical companies rushing to set up their new manufacturing facilities in Himachal Pradesh may have to face a deadline in the near future. Three years from now, the attractive tax exemptions offered to the companies coming up in the states of Himachal Pradesh and Uttaranchal may cease to exist. Enough hints were given by the Union Finance Minister in his budget speech when he said that the exemptions enjoyed by the units coming up in the states of Sikkim, Uttaranchal and Himachal Pradesh will be limited to units set up or expanded on or before March 31, 2007. However, the area specific exemptions granted to Jammu & Kashmir and North Eastern States are going to continue.