Leading contract manufacturers from Baddi, are exploring possibilities to get orders from units in Karnataka, Tamil Nadu, Andhra Pradesh and Maharashtra. If they succeed, that is going to hit the contract manufacturing units in these states quite badly.

In Karnataka, out of 240 pharmaceutical units more than half are engaged in contract manufacturing. Many MNCs in India are outsourcing production from at least one manufacturer or loan licencee from Karnataka. The recent visits of some representatives of the companies from Baddi in Karnataka to book orders have rattled local contract manufacturing units.

Industry sources in the state have confirmed that the proposals from contract manufacturing units from Baddi have been received by certain pharma companies in the state.

With excise concessions and other tax incentives being a major attraction to outsource production, Karnataka units are eager to get certain dosage forms manufactured on contract basis just to reduce manufacturing costs.

Micro Labs, the first entrant from Karnataka to Baddi with an investment of Rs 25 crore to set up its facility will be commencing production a range of tablets and capsules dosage forms in the next few months. The company has been already approached for outsourcing of products. "The Baddi investment is on schedule, but we are looking at two possibilities: Offer our plant for contract manufacture if there is spare capacity. Consider production outsource of different dosage forms for which we might not have the facility at the free zone," informed Suresh Khanna, president, API, Micro Labs and designated project leader of the Baddi plant mission.

The team of contract manufacturers have already approached companies in Mumbai, Hyderabad, and Tamil Nadu. Karnataka companies were on their preferred list going by the products developed in the state. Other major companies approached are AstraZeneca and Himalaya Drugs Company.

The MRP +excise duty is biggest spoke in the wheel which has affected the contract manufacture units in Karnataka. Having an additional plant at Baddi is not a viable solution for all units from Karnataka, according to a spokesman for small scale units. Over dependence on certain select locations for pharmaceutical manufacture could lead to a crisis in the event of natural calamities, he said.