Exodus of drug units from Gujarat to the excise free states of Himachal Pradesh, Uttaranchal and J&K has caused a sharp fall in share of state's pharmaceutical production to 28 per cent from about 45 per cent an year ago.

Industry sources in Gujarat estimate overall drug production in the state was only to the tune of about Rs.14, 000 crore in last year when compared to the Rs.22, 500 crore odd production before the introduction of MRP based excise duty, last year. Further, over 100 small-scale drug manufacturers in Gujarat have surrendered their manufacturing licenses citing inability to comply with Revised Schedule M requirements due to unfavourable business environment, said Dr.S.P.Adeshara, Gujarat FDA Commissioner.

Except for Dishman Pharma and J.B.Chem, most of the Gujarat based pharma units have set up own formulation units in Himachal Pradesh or Uttranchal and are converting their existing units in Gujarat for export oriented manufacturing facilities. The list of migrants include Zydus Cadila, Cadila Pharmaceuticals, Alembic, Torrent, Intas, Sun Pharma, Troika pharmaceuticals, Paras Pharma, Linkon Pharma etc., said sources.

"Unless the Government either reduces the excise duty to eight per cent or offer incentives urgently, at least 500 units in Gujarat will either close down or migrate to excise free zones. So far about 150 units, including most of the major drug manufacturers, have migrated to the excise free zones," said Dr.R.S.Joshi, executive secretary, India Drugs Manufacturers Association - Gujarat State Board (IDMA-GSB).

"Production of pharmaceuticals could have gone down by 15-20 per cent in the State from the earlier 45 per cent of the national production, since the units at Himachal and Uttranchal started production. Apart from this, 100 units have so far surrendered their manufacturing licenses for inability to comply with Revised Schedule M," said Dr. Adeshara.

While Zydus Cadila at present has only one formulation plant in Gujarat at Moraiya for tablets, capsules, liquids and injectaibles, it has three manufacturing plants at Goa and two API plants at Navi Mumbai, Patalaganga and at Ankleshwar in Gujarat, besides the formulation facility at Baddi, commissioned in 2004. Cadila Pharmaceuticals invested about Rs 45 crore to construct a new facility at Samba in Jammu and Kashmir to take advantage of the excise benefit. To manufacture tablets and liquid formulations, Torrent invested Rs 137 crore in its new Baddi plant, which was commissioned during November 2005. Alembic also invested Rs.28 crore to set up a manufacturing facility at Baddi.