With India emerging as a potential base for contract manufacturing, the Bangalore-based Kemwell Pvt. Ltd. is keen to capitalise on its expertise as a dependable pharmaceutical production source in the international market.

Suresh Khanna, executive director, Kemwell Pvt. Ltd. is confident that the company's two WHO-GMP complied production formulation plants located on the Tumkur Road and Neelamangala in the outskirts of Bangalore at an investment of around Rs. 30 crore and with a 60-70 per cent utilization capacity would be approved by the global giants and that the international business proposal would take off in the next 6 to 8 months time.

Suresh Khanna now at the helm of Kemwell is an electrical engineer with two decades of service at Larsen Toubro and is also the managing committee member of Karnataka Drugs and Pharmaceuticals Manufacturers' Association (KDPMA). In a tête-à-tête with Nandita Vijay, Suresh Khanna, discusses on the future prospects in contract manufacturing which according to him is a sign of a new wave in the country.

How do you view the new wave contract manufacturing among pharmaceuticals enterprises in the country today?

The future of contract manufacturing in India is quite bright in view of the liberalisation and globalisation of pharma business. The companies have realised the importance to concentrate on their core competencies and outsource services which do not fall in their focussed area. This has resulted in outsourcing in a big way which is likely to boost the prospects of contract manufacturing even further. Contract manufacturing is the trend in business operations. Even global giants are shying away from in-house manufacture and prefer to outsource activities. Today's business game plan is to focus on core competencies because it is cost-effective and viable to enhance one's reliability in a competitive environment.

How are the Indian companies rated as contract manufacturers?

Pharmaceuticals is a knowledge-based industry and with many qualified people available in the country, there is no doubt that Indian contract manufacturing companies have a great future mainly because the capabilities of the technical personnel can match the best available in the world. It is this factor that will work as an advantage for the country in the years to come. The main benefit for the global pharmaceutical majors to get their products outsourced from companies like Kemwell is that it would be more cost-effective and without compromising on quality.

What are the major problems for the contract manufacturers in India?

The problems are the same as of other segments in the pharmaceutical sector such as controls on pricing, spiralling input costs and the margins being not commensurate with the cost increases. It is becoming increasingly difficult to cope up with the rising costs due to stringent quality requirements and therefore something has to be done with the drugs price control order (DPCO) norms urgently.

Are there any regulatory issues affecting the sector?

There are no specific regulatory issues that are affecting contract manufacturing as such. However, I would like to make a general comment that the Drugs and Cosmetics Act, 1940 which has remained unchanged for over 40 years needs to be re-looked in view of the changing scenario.

How are the contract manufacturers doing in Karnataka?

The contract manufacturers in Karnataka have some of the best facilities in the country and are doing well for themselves but for the margins which are very slender and it is becoming very difficult to make both ends meet.

What are the prospects you see in the next few years in the sector?

I am upbeat of the prospects of contract manufacturing sector and the future seems to be bright particularly in the post-patent era. With the right mix of domestic and export contract manufacturing activities, there is absolutely no doubt in my mind of a very exciting and fruitful future ahead.

Would you be able to give us details of the contract manufacturing projects at Kemwell?

The areas of contract manufacturing at Kemwell for large Indian and MNCs units are liquid oral formulations and tablets. Biokem, a Kemwell group unit set-up in 2001 specialises in ointments/creams, liquid oral drops, external drops and dusting powder dosage forms. Kemwell also has an exclusive facility for manufacture of ayurveda liquid oral formulations, ointments and creams.

When did Kemwell get into contract manufacturing?

Kemwell has been in contract manufacturing from 1984-85 and now caters to nine multinational companies (MNCs) on a regular basis. Dialogues are on with companies in US, UK and Europe to get them over to manufacture their branded/generic products at our plants that have already gone through several rigorous inspections by international auditors of the MNCs located in India.