High land cost, dearth of power supply and harassment from political contractors are prompting leading industrialists of pharma sector to put their expansion plans on hold and looking for the right opportunity based on the new government’s policy in residuary Andhra Pradesh, until then majority of them prefer to stay back in Telangana.

Even as the central government has divided Andhra Pradesh into Telangana and Andhra Pradesh (Seemandhra) and both the states becoming a reality from 2nd June 2014, everybody was of the view that large chunk of pharma units from Hyderabad would shift their bases to Seemandhra.  But the scenario seems to have changed, as many of them are preferring to stay back in Hyderabad rather than shifting their bases. The high land costs and scarcity of power supply in the residuary state of Andhra Pradesh are prompting major pharma units to put them on the hold.

For Seemandhra, the coastal region with the sea cost on the east is the best place for the pharma industry to flourish.  Despite the coastal region being an ideal place for pharma and bulk drug industries, the players in the sector see Hyderabad and its surroundings as a more convenient place for their expansion plans. Given the established connectivity, work culture and adequate availability of workforce, including technocrats and scientists, besides good medical facilities and living conditions, the bulk drug manufacturers prefer Hyderabad for expansion.

According to R K Agarwal, general secretary, Bulk Drug Manufacturers Association (BDMA), “Hyderabad has a better connectivity. This is lacking in Seemandhra. It might take another 10-15 years for the facilities to develop in Seemandhra. Moreover, Hyderabad has become IT hub and it has used technology to manage harmful effluents which is yet to happen in Seemandhra.

In Seemandhra state, districts like Vishakhapatnam, Nellore, Ongole and Krishna have the potential to develop the bulk drug industry, but for that, the new government should come out with liberal and friendly policies favoring the pharma industry. But if one looks at the incidence of the present Jawaharlal Pharma City in Vizag, industrialists fear at the huge cost of land and lack of proper supply of power.

According to industry sources, the cost of land in Jawaharlal Pharma city is almost upto Rs.2 crore per acre. Fearing the huge land cost, lack of proper power supply and politically motivated agitations, many pharma units have put their expansion plans on hold. At present there are 36 pharma units operating in the pharma city in Vizag and about 26 others are under various stages of construction. Over 20 per cent of bulk drug and other related units were established in the pharma city, but due to various problems majority of them have put them on hold.