​​Pharma to return to Gujarat, print impacted

The Indian Drug Manufacturers Association (IDMA) has shared an interesting bit of information. The state of Gujarat which contributes to 33 per cent of India’s pharmaceutical production, is expected to be boosted by 40 per cent by 2020.

05 Mar 2018 | By Sriraam Selvam

According to reports in the mainstream media, the Gujarat Food and Drug Control Administration (FDCA), has been processing "30-40 applications every week for brownfield and greenfield units since GST has been implemented." The total investment would be Rs 600-650 cr.

In the pre-GST era it was 10-12 applications per week.

The reason, according to experts is, ever since GST was implemented in July of 2017, the attractiveness of setting up industries in tax havens has diminished.

A good example is Baddi. This is a pharma and packaging hub. According to a report by PrintWeek India and WhatPackaging? there are more than 350 pharma units in this hilly township after a subsidy scheme was announced in 2003. At least 50-60 mid-sized and small packaging firms, including cater to companies like Alembic Pharma and Torrent Pharma which specifically moved out of Gujarat to Baddi.

Other than Himachal Pradesh, the other pharma hubs which provide incentives are Uttarakhand and Sikkim.

According to the IDMS, "Tax sops had drawn much of Gujarat’s pharma industry to other northern states. Over 200 such units moved out of Gujarat about 10 years ago. After GST rollout, pharma units in Gujarat will have a level-playing field to compete with the states offering tax incentives. We expect more than 50 units to return to Gujarat, and that will improve our share in India’s pharma sector."

Other than GST, Gujarat border towns like Vapi, Valsad, Ankleshwar, etc are seen as lucrative destinations because of the low cost of land, plus these towns are in close proximity to the drug hubs of Bharuch and Ankleshwar. Furthermore, Gujarat state government is planning to set up a 50-hectare pharma park in Sanand under the Cluster Development Programme of the Centre.

During the Vibrant Gujarat conclave in 2017, the state government launched a slew of schemes and offered sops to the pharma sector. This included the announcement of a dedicated manufacturing hub and a policy push for pharma R&D. Pharma printers that this correspondent spoke to, are expecting a boost from the state’s agenda to promote the healthcare and medical devices sectors. This should benefit pharma printing.

Rating agency ICRA has said, "The growth momentum (in the pharma industry) is likely to face pressure going forward. Besides increased regulatory scrutiny and consolidation of supply chain in US market resulting in pricing pressures along with increased R&D expenses will also have an impact on profitability of Indian pharmaceutical companies."

Despite these challenges plus GST's impact, ICRA found that several Indian pharma companies have ramped up their R&D spend, targeting pipeline of specialty drugs, niche molecules and complex therapies.