With phenomenal growth over the last few decades, India’s pharma industry has turned from a non-entity to a world leader in the production of high quality generic drugs. From about a few hundred crore rupees around the 1970s, drug production last year was worth over Rs 120,000 crore.
Till the 1960s, medicines were imported and the pharma industry was dominated by foreign companies. Fifty years down the road, the character of the industry is distinctly Indian. With its safe, efficacious and affordable medicines, India has acquired a dominant position globally. Maharashtra and Gujarat have led the way in this journey.
State Economies
The pharma industry in the two States has flourished thanks To the support it has received from the governments. This made them the top destinations for pharma majors, Indian or MNC.
Maharashtra has also attracted people with different skill-sets and socio-economic backgrounds. A very cosmopolitan State, it has been the breeding ground for innovation.
Both States have flourishing economies. Maharashtra’s State GDP is Rs 10.45 lakh crore, while Gujarat’s is Rs 5 lakh crore. In 2011, Maharashtra’s share in FDI was 32.16 per cent against Gujarat’s 4.72 per cent, Maharashtra received 120 investment proposals against Gujarat’s 50. Maharashtra’s per capita income is Rs 87,686 against Gujarat’s Rs 75,115.
Maharashtra has a thriving economy based on strong infrastructure that includes roads, airports, railways, ports, telecom and power. Maharashtra’s favourable economic policies of the 1970s boosted business and economy, making it the country’s leading industrial State. However, Gujarat is fast catching up with Maharashtra on all fronts.
Pharma Leader
Maharashtra is home to 3,139 pharmaceutical units, with major centres in Mumbai, Thane, Tarapur, Nashik, Aurangabad and Pune.
The State is the leading producer of vaccines. A number of Special Economic Zones have also been notified, such as the ones at Navi Mumbai Ajanta Projects Ltd and Wockhardt at Aurangabad, a dedicated SEZ at Nanded, and Serum Bio Pharma Park at Pune. Gujarat is a strong pharmaceutical manufacturing hub with over 3,000 units. Its rich base of supply of APIs (active pharmaceutical ingredient) has attracted many MNCs to set up facilities in Gujarat.
There are several pharma clusters around Ahmedabad, Vadodara, Ankleshwar and Vapi. There are also dedicated SEZs like JB, Pharmez and Dishman. Maharashtra is industry-friendly with supportive industrial norms for setting up pharma units.
The authorities are willing to advise new units on the norms instead of policing them. To encourage new units Maharashtra provides special incentives and exemptions such as waiving electricity duty for 15 years, exemptions in Stamp duty, Refund of Octroi in certain categories, and Special Capital Incentives (SCI) to all SSI Units. Despite industrial movement out of Maharashtra due to the emergence of Goa as a manufacturing base, the State continues to provide a conducive industrial and financial climate.
However, the pharma industry in both Maharashtra and Gujarat received a setback with tax and excise exemptions offered by industrially backward States such as Himachal Pradesh, Uttarakhand, and Jammu and Kashmir. This resulted in quite a few units shifting their manufacturing facilities to those states for more attractive fiscal benefits.
Also, in the recent past, a fair degree of industrialisation has happened in these States, propelled primarily by the financial benefits extended by the Union Government to manufacturers. However, with the Centre reducing excise duties drastically and the imminent expiry of the excise-free periods, Gujarat is recovering lost ground rapidly.
Finance, connectivity
Although the Gujarat pharma industry is making rapid strides, Maharashtra still remains the country’s pharma capital.
With a large market, big hospitals, research and educational institutions and good communication and transport in place, Mumbai accounts for maximum number of head-offices and marketing offices of pharma companies.
The city has three important financial hubs — the Mumbai Stock Exchange, the Reserve Bank of India and the National Stock Exchange. Maharashtra ranks first in the generation of nuclear and thermal electricity.
Mumbai offers easy connectivity with the rest of the world, making it easier for companies to set up research activity in Mumbai. The city is serviced by major ports and airports that facilitate domestic and international logistics.
Goa, in focus too
Goa is now developing as the third State in the western region of India with a major presence of pharma manufacturing units, with plenty of land being available with GIDC that are allotted very quickly to set up units.
Goa’s power tariff compares very favourably with Maharashtra’s and Gujarat’s.
Goa also has an active and dynamic FDA, a number of pharmacy colleges and skilled workers to run these manufacturing units.
(The author is Secretary-General, Indian Drug Manufacturers Association.)