The 100 per cent export facility of Xechem International Inc, New Jersey, to be commissioned in Chennai, may run into serious problem with a sharp rise in cost overrun. According to company sources, Xechem is still to obtain clearance from the Tamil Nadu government.

The acquisition of land for the facility is yet to be completed although the company has already made an initial deposit in this respect to the Small Industries Development Corporation Limited (SIDCO), an undertaking of the Government of Tamilnadu.

The acquisition is scheduled to be completed in October this year as per an understanding reached when Xechem Pharmaceutical India Ltd, the Indian subsidiary, announced its plan to set up a facility at Siruseri.

The objective was to manufacture anti-cancer compounds and drugs from medicinal plants and trees, and the facility was to be completed in two phases with a total investment of Rs.150 crore. According to sources in Tamil Nadu Industrial Development Corporation (TIDCO), an area of 40 acres has already been acquired by the SIDCO for the company.

TIDCO would also take an undisclosed equity stake in the company, to be registered as Xechem Pharmaceuticals India Ltd. It is stated that Xechem International would be holding 80 per cent equity stake in the Indian company which will have a debt-equity ratio of 1:1.

The first phase of the project was to be undertaken by October this year with an investment of Rs.100 crore. The equipments and machinery, all imported, expected to cost 30 per cent of this investment. In the second phase, the company is to set up a R&D centre at an investment of Rs.50 crore.

Xechem International was founded by Dr. Ramesh Pandey in 1994. The company owns the proprietary rights to extraction, isolation and purification technology to produce paclitaxel, an anti-cancer compound used for the treatment of ovarian and breast cancers besides small cell lung cancers, and AIDS-related Kaposi sarcomas. The company also owns the patent for the isolated pure paclitaxel.

The company develops this compound from the Himalayan yew, a conifer that grows in the Himalayas, China and in Washington State in USA. The company would be importing the trees from China and Washington, according to source, besides sourcing the same from the Himalayas.

The Chennai facility will produce 60 kgs of paclitaxel annually. Almost half of this would be used to make nine anti-cancer formulations. Most of them would be in the injectable forms, according to sources. The company would be exporting the same, and will contemplate entering the domestic market at a later stage.