As the newly formed Telangana and the residual state of Andhra Pradesh are competing with each other to attract investments now, Karnataka fears that it would much lose some of its major projects in the drug manufacturing space.

Though no companies have confirmed their investments into Andhra Pradesh, Telangana and Tamil Nadu, industry sources are of the view that there is every possibility that investments into Karnataka may get diverted to its neighbouring states.

In March this, Karnataka Udyog Mitra, the single window agency which facilitates investments into the state cleared the GlaxoSmithKline Pharmaceuticals formulation production plant project. The MNC has now been allocated 50 acres of Karnataka Industrial Area Development Board (KIADB) land at the Vemgal Industrial Area in Kolar for the manufacture of tablets and capsules. The production plant will require 2600 KVA power. The company is slating a Rs. 994 crore investment and is slated to provide employment to 232 personnel. However sources have indicated that the GSK is yet to confirm this investment.

Industry observers said that GSK is set to seriously contemplate whether to set up the facility in Karnataka. This is primarily because of the Telangana government's new initiatives unveiled by governor E S L Narashimhan to establish a Pharma City to give a further fillip for the development of pharmaceutical industry in the region. There are sops like tax rebates, slashing of excise duty, uninterrupted power and water supply. With the presence of Ramagundam, the City of Energy situated on the banks of river Godavari, off 250 kilometres from Hyderabad is a key factor favoring investors with regular and quality power.

According to the Governor of Telangana, the region contributes one third of the pharma production in India and to sustain this growth it would look to woo Greenfield and Brownfield projects in pharma and biotechnology.

In the case of Karnataka, there have been no any major Greenfield pharma investments for over a decade. The government which unveiled a Karnataka Pharmaceutical Policy primarily to spur investments are yet to be implemented. Therefore there are clear signs that that the state lacks the assertiveness to woo and retain investments, expressed sources.

“We are waiting for GSK to finalize and cannot comment on the issue,” M Maheshwar Rao, Commissioner for Industrial Development and Director of Industries and Commerce told Pharmabiz.

It is gathered that GSK is making its second time entry into Karnataka. Over a decade ago, the global drug company had a full-fledged manufacturing facility but later went on to shut down operations. However, it has over five pharma companies in Bengaluru undertaking contract manufacture for its range of capsules and tablets. These are Kemwell, Medreich now acquired by Meiji Pharma, Remidex, Geltec and Tejkamal Pharmaceuticals.

Former employees of GSK do see that the global drug major would see Karnataka as a favorable location to kick off its dedicated production plans which could be driven by climatic conditions, access to qualified workforce and presence of leading research institutes like NCBS, JNCASR and IISc.