Suresh G Kare, Chairman, Indoco Remedies, elaborates why Maharashtra has been a preferred destination for the pharma sector
The Indian Pharma market (IPM) today is almost Rs 100,000 crores, and Maharashtra’s contribution is about 11 per cent. While the IPM grows at twice the GDP, the growth in pharma sales in Maharashtra has been above the industry average. This apart, a large chunk of pharma products are manufactured and exported from the state which has been instrumental in driving the growth of pharma industry in India. Hence, Maharashtra can be truly crowned as the capital of the pharma industry in India.
Over 3000 pharma units have been set up in Maharashtra with corporate offices in and around the state, like, Mumbai, Aurangabad, Pune, etc. The state is a leader in vaccine production and a number of Special Economic Zones (SEZs) have been notified within the state.
On a broader scale too, Maharashtra has always remained the industrial and financial hub of India. Various industries started their operations in the state and grew substantially due to the conducive atmosphere for growth and favourable government policies. Among all the industries, the pharma industry has always been a key beneficiary from such policies. Today, almost all major pharma companies in India, including Indoco, have their headquarters in Mumbai. Moreover, many pharma companies have chosen Maharashtra as a centre point due to its advantageous location for smooth distribution across various parts of the country.
As mentioned earlier, a large consignment of pharma products are exported from the ports in Maharashtra and the reasons are many. A number of shipping lines operate in the state, such as sea ports and inland container depots (ICDs) located in various parts of the state. The port facilities are well equipped with latest technologies and state-of-the-art infrastructure. The custom clearance process is highly automised through Electronic Data Interface (EDI), which facilitates smooth clearance of import and export shipments. Maharashtra ports have the advantage of docking high capacity vessels as compared to ports in other parts of India. The Custom House Agents’ (CHA) services available in the state are the best and the CHAs are updated with the latest changes in rules and regulations.
However, it is true that other states provide tax benefits to the industry, and as a result, many companies have decided to set up shops outside Maharashtra to reap the benefits of excise and tax duties. This has resulted in Maharashtra losing tax revenues, employment and growth opportunities.
Indoco too has set up new manufacturing facilities at Baddi in Himachal Pradesh and Goa to grab the benefits offered by these states. Indoco has eight manufacturing facilities, of which four are located in Maharashtra and four in other states. In fact, Indoco commenced its manufacturing operations in Maharashtra with a small finished formulations facility in Thane, way back in 1960s, followed by a Andheri unit in 1974 and one in Aurangabad in 1990. The company also has three of its API manufacturing facilities based in Maharashtra. We are in the process of expanding our API manufacturing capacities and have already commenced construction of a greenfield API facility in the plot adjacent to our existing manufacturing facility in Patalganga with an investment of Rs 100 crores, thereby making Maharashtra the API manufacturing hub for Indoco.
Most pharma companies, while establishing new facilities elsewhere, continued with the current manufacturing facilities in Maharashtra due to advantages like good infrastructure, availability of skilled manpower and ease of doing business. The state also has the advantage of skilled manpower with so many pharma graduates passing out of the pharmacy colleges every year. This skilled manpower supply is essential to maintain the international standards of manufacturing due to the strict regulatory guidelines by the regulatory bodies of the world. India has the highest number of US FDA approved plants outside the US and Maharashtra has the highest number of such plants in India.
The regulatory infrastructure in the state is of the highest order and the percentage of substandard drugs produced in Maharashtra is remote as compared to other states. Maharashtra is also the first state to set up an independent Intelligence Branch with a separate wing to facilitate and speed up investigations under acts enforced by the FDA.
Research and development (R&D) is the core of the pharma industry and the industry thrives only if substantial investments are made in developing new products for domestic as well as international markets. Indoco has never moved out of Maharashtra as far as its R&D efforts are concerned. We started our R&D centre in Andheri and then moved to Rabale in Navi Mumbai, where we have a world-class R&D centre, spreading over an area of 100,000 sq ft. The R&D centre has more than 300 scientists, developing new API manufacturing processes as well as finished products. The research activities in the pharma industry are now moving from development of generic products to super generics, value added generics and biosimilars. Maharashtra has the ability to attract R&D investments in the new research areas and take appropriate steps to encash on this opportunity.
Now that the period of the tax incentives given by other states is almost over and after reaping the advantages of tax and excise incentives, many pharma companies are again looking at Maharashtra. The motivation to continue or expand the manufacturing infrastructure in those geographies is lost, as many of these states have poor infrastructure, including erratic power and water supply. Hence, Maharashtra can look forward to an increase in the number of pharma manufacturing facilities, provided appropriate incentives and assistance is offered.