Express Pharma

Still leading the race?



Maharashtra, a traditional hub of the Indian pharma industry, could face an uphill task to retain its decades-old dominance in this sector By Sachin Jagdale

Maharashtra has long been an Indian pharma hub. However, benefits offered by other states such as tax holidays, low-cost land, cheap electricity etc. have managed to lure away many renowned pharma companies from Maharashtra. Though the state is still a leader, others like Gujarat, Goa, Himachal Pradesh, Andhra Pradesh, Sikkim, Karnataka etc are leaving no stone unturned to raise their credit amongst the pharma players. Hence, Maharashtra is likely to face a tough time ahead to ensure that it remains ahead of the race.

Steps to lead

Pharma companies’ exit from the state is perhaps more visible since it has long been a hub for the sector. The emergence of different tax havens in the country have caused pharma companies to look beyond Maharashtra and this has given rise to the question, “Wasn’t the state proactive enough in addressing the needs of the pharma industry?” A detailed analysis reveals that while more could have been done, the state has introduced a few good measures for the pharma industry in the past few years.

20160515ep12Kapil Bhargava, Former Dy Drugs Controller (I) CDSCO and advisor to pharma companies in India, says, “I see the number of initiatives taken for e-governance replacing manual procedures. Licensing applications and grant, certificates application (e.g. Certificate of Pharmaceutical Product (COPP), Free Sales Certificate (FSC) and others) and grant of certificates has eased the processes for applicants. Personnel from companies do not have to visit offices and wait for officers unnecessarily. The younger lot is much more electronic savvy and they too prefer this.” He finds this a significant step and lauds the government for it.

20160515ep11Sachin Purohit, Managing Director, Genome Biotechnologies, echoes Bhargava’s words and points out, “Maharashtra FDA is well organised. The new online FDA services for renewal of license, getting licenses for new products and new premises etc. are easy and fast in Maharashtra.”

20160515ep13BG Barve, Joint Managing Director, Blue Cross Laboratories also feels that the state’s decades-old supremacy in the field of pharma is an outcome of Maharashtra’s favourable policies. He explains, “Maharashtra is the only state where the work pertaining to manufacturing licenses under Drugs and Cosmetics Rules, 1945, is decentralised. From 1996, the FDA took up the task to computerise the entire system. The drug sample coding and analysis reporting has been computerised. To encourage new units, the Maharashtra government 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. The state continues to provide a conducive industrial and financial climate.”

What remains to be done…

20160515ep15With many new states joining the race, the time has come for Maharashtra to work on plugging the loopholes that’s remained neglected for a long time. For e.g. There are many smaller pharma players operational in the state and their requirements are different than the bigger players and need enough attention from the state FDA. However, industry veterans like Subramanian Vaidya, Director – BlissGVS Pharma, Chairman – IDMA – (MSME – subcommittee), finds FDA a little careless in this regard. Vaidya explains, “The government should encourage the FDA to give enough guidance to smaller manufacturers as the industry is a technology driven one. Moves of such nature would have made the smaller ones grow in size, which is perhaps not happening as it should have been. The FDA itself should convene a meeting with small and medium manufacturers and understand their problems. There are small associations in the districts, quite a few of them are in Mumbai itself. In the last two or three decades, one has not witnessed any meeting of all these bodies together to try and understand the problems of the industry. It might very well seem that the FDA is only interested in inspecting, regulating and seeking revenue for their department through different means.”

Giving a generalised perspective, Purohit points out that issues like octroi/ LBT are still creating problems. Infrastructure and traffic problems are acute and progress is slow. This is forcing people to think of other alternatives. He also highlights that the licenses for new justified formulations (necessary for growth) are difficult to get in Maharashtra.

While criticising the lack of common effluent plants, electricity supply issues and labour unions as few of the reasons for pharma companies looking at options other than Maharashtra, Barve asserts, “Maharashtra should be industry-friendly with supportive industrial norms for setting up pharma units.”

20160515ep16The pharma sector is a chemical-based industry and happens to be one of the leading polluting industries in the world. So, it becomes the prerogative of the state to help the industry to become more environment compliant. However, according to Vishal Jajodia, Chairman, V-Group (Swati Spentose), this is perhaps not happening in Maharashtra.  He says, “Gujarat has been ahead of Maharashtra by 10 years in environment compliance, which is not only a necessity but also an urgency given the serious environmental damage which industries cause and its impact on common people’s life.”

He adds that in Maharashtra, there is very limited environmental compliance among the pharma players. The Maharashtra government needs to learn from the Gujarat model. If they can do this,  the investment, progress and success of the pharma industry in the state will grow manifold. He says, “Increase in investment is not the definition of success. Successful consistent profit making business is real success. The MNCs and large companies are ready to pay a price. Market opportunity for profit is there, but the mind set needs to be aligned.”

Will Maharashtra retain its edge?

Though other states in the country are offering various benefits (mainly tax benefits) to pharma companies, the period of these sops was limited. According to some experts, Maharashtra has always been a preferred choice for the pharma companies. Hence, they would return once the period for tax exemptions offered by other states get over. However, some others are of the opinion that since many pharma companies have already established their plants in other states and many of them have got global certificates, it will be difficult for them to relocate completely to Maharashtra.

Bhargava explains, “The companies have moved to other states mainly because of tax exemptions. During these years they have established their sites there. They are comparatively new (10 – 12 years old) and have procured approvals from regulatory bodies like Medicines and Healthcare Products Regulatory Agency (MHRA), US FDA, and WHO (PQ) in addition to The Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PICS) countries and Rest of the World (ROW) markets. The companies which are becoming bigger and have their headquarters in Mumbai may re-start their more technical activities e.g. R&D centres. A few of the companies may re-orient their business and move to contract research (in APIs, intermediates and also in formulations) and so on. They may not move back for their routine production operations. I do not know if some company has moved back to Maharashtra and recommenced its production activities.”

Tax benefits did offer a temporary advantage to other states but Maharashtra continues to score in many other areas. For e.g., Maharashtra has well developed ports which make export easy. Though there is a scope for improvement, infrastructure here is still much better than in the other states. Besides international airports, there are many small airports as well in Maharashtra. Above all, Maharashtra’s capital, Mumbai, is also the business capital of the country. Having operations here does give pharma companies better access to the global world.


As Purohit informs, “Despite the tax benefits given by other states, Maharashtra continues to host the largest number of pharma facilities. Now, with the tax incentives given by other states coming to an end, many pharma companies are again tapping Maharashtra to set up their manufacturing bases. Mumbai is the major exporter of pharma drugs. The regulatory system in Maharashtra is one of the best in the world. It has the highest number of US FDA approved plants. Quality pharma production has always remained Maharashtra’s feature.”

Barve reiterates Purohit’s opinion and says, “Tax incentives offered by other states definitely convinced many pharma companies to move out of Maharashtra. But, it is a temporary phase.  Now, as the tax incentives given by other states have been getting over, many pharma companies are again tapping Maharashtra to set up their manufacturing bases. He informs, “Many pharma companies are slowly relocating themselves in Maharashtra. In the years to come, the situation would improve further provided the Maharashtra government offer special benefits to the pharma industry.”

The global pharma community still looks at Maharashtra as a preferred location in India. Almost every big pharma company has its corporate office in the state. It is true that Maharashtra has lost many pharma units to other states, but the mistakes can be rectified. Also, though many pharma companies have started their plants in other states, they have also continued with their operations in Maharashtra.


Barve says, “Maharashtra has always remained a hub of the Indian pharma industry with major centres in Mumbai, Thane, Tarapur, Nashik, Aurangabad and Pune. Maharashtra is also the first state to set up independent Intelligence Branch with separate police wing to assist investigation under Acts enforced by FDA.”

According to Purohit, the state government should be more proactive in terms of incentives and investment in talent creation and skill development. He suggests a few ‘must do’ things for the state government. He says, “The state should also encourage clusters and common facilities such as ETP and cluster-based projects. This will help in sharing the cost, enhancing quality and innovative capabilities. This will also help the state to consolidate its position as the most preferred destination for pharma companies.”

However, Vaidya wants the state to take immediate remedial steps and convince pharma operators to open up new factories in the state for manufacturing both formulations and APIs. Describing how it could be done, he states, “The state has to seriously consider giving heavy concessions to the new venturing units in the state and provide relief at least in the initial first five years in terms of sales tax rebate, excise free zones, and cluster areas in the state. Common basic amenities in the clusters, including participative analytical centres and effluent treatment plants should be sponsored by the government.”

Going ahead

Thus, it is clear that Maharashtra has suffered a set-back where its image as a pharma hub is concerned, concerted and strategic efforts are needed from the government to implement  proactive measures that can reverse the damage and bring back the pharma players back to the state. However, if the Maharashtra government addresses the changing demands of the industry then it will definitely continue its reign as the most preferred location for pharma players.

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