In a bid to provide the much-needed fillip to the Indian pharmaceutical industry, the EXIM Bank has set apart 9 per cent of its total allocation to this sector amounting to Rs 12,000 crore. The decision to provide a sizeable portion of funds to the sector comes in the wake of the expansion plans by pharma companies.

While EXIM has provided all the fiscal support to Biocon, Hikal and Strides Arcolab in Karnataka, it has indicated that four Indian pharma companies in Maharashtra and Gujarat may also get funding support for their planned acquisitions of companies abroad. EXIM Bank is expected to finance these acquisitions in the next three months.

There is no limit for the expansion plans of the Indian pharma companies abroad especially in Latin America and the US. At least 4 out of the 6 companies in the region are supported by EXIM Bank, stated T C Venkat Subramanian, chairman & managing director of Export-Import Bank of India, who spoke to the media after the Strides Arcolab R&D centre inauguration.

One of the key reasons for the expansions by Indian pharma space is the recognition of the sector's scientific manpower capability which is recognised worldwide. There have been several joint development initiatives in manufacture and research between global and Indian units. Another potential source of business is the contract production and contract research openings for India.

There are also many medium-sized companies in the US and Europe which are keen to be acquired by Indian companies set up a facility jointly in their countries. One such company is Hikal, pharma speciality chemical major which acquired 50:1 per cent share holding of a Denmark Denmark-headquartered pharmaceutical marketing and distribution company, Marsing & Co.

The opportunities for pharma companies in the future are research and manufacture. There has been substantial increase in R&D spends to 10 per cent from the earlier 4 per cent allocation, informed the EXIM chief. "It now vital for the government laboratories to go in for public-private initiatives to speed up the research initiatives that are pending with the former though latter technology capabilities," he added.

Pharmaceutical sector in the country has been in the limelight with filing of DMFs and ANDAs. In 2003, Indian companies filed 100 DMFs and 73 ANDAs which accounted for 30 per cent of global filings. The following year in 2004, there were 161 ANDAs filed which accounted for 33 per cent of the global filings.

Reaffirming the buoyant growth of the sector, the EXIM chief stated that the pharma sector's CAGR (compounded annual growth rate) of 13.5 per cent was ahead of the global companies 9 per cent.