Hyderabad turns hot as formulations hub

P Ramkumar - Hyderabad

Hyderabad, which is regarded as the bulk drug capital of India, is today booming in formulations business. The total production of formulations in Andhra Pradesh during 2001-2002, on a conservative estimate, amounted to over Rs 2500 crore. This segment is growing at a rate of around 15 per cent in terms of production value and 10 per cent in the number of companies annually in the state.

Though a saturation point has been reached in the formulations segment, entrepreneurs still look to the state in this line of business due to the favourable conditions, low investment and pro-active attitude of the state drug control authorities, says P Koteswara Rao, president of the Organisation of Pharmaceutical Manufacturers (OPM) of Andhra Pradesh.

In an exclusive to this correspondent, Rao said Hyderabad had become the most favoured destination for outsourcing formulations by multinationals and major Indian pharma companies in India. Outsourcing of formulations from the city is increasing and many companies are making the best use of the advantages that are available in Andhra Pradesh. He said multinational companies were satisfied with the quality standards maintained by the AP-based companies, and hence were outsourcing their formulation needs from Hyderabad. ‘‘Today there is no multinational or Indian company interested to create additional manufacturing facility for making formulations, for the fear of impending imposition of Schedule M,’’ he said.

MNCs

Some of the companies that are getting done their formulations in Hyderabad include MNCs like Pfizer, Johnson & Johnson, Novartis, Wyeth, Wander and Glaxo SmithKline Beecham, and Indian majors like Cipla, Ranbaxy and Wockhardt, apart from a host of Gujarat and Mumbai-based companies.

According to him, the companies, which make formulations on contract basis in Hyderabad, include Legend Drugs and Formulations, Tsar Pharmaceuticals, Endoven, Armour Pharma, Hitech Pharma, Sangfroids, Sai Parenterals, Indu Drugs, Natco Pharma, ESPI Pharma, Elegant Pharma, Sarvotham, Qualicare and VVS Chemicals.

Favourable Conditions

The president of the OPM said companies preferred Hyderabad for placing contracts due to a host of favourable factors like the availability of inputs i.e. bulk drugs, trained and skilled manpower, quality standards of production, cheaper cost of living, cosmopolitan culture of the city, less union problems, liberalised & pro-active policy with respect to licensing and the presence of R&D centres like the Indian Institute of Chemical Technology, Centre for Cellular and Molecular Biology, National Institution of Nutrition, etc.

He said the formulations generally outsourced related to therapeutic areas like antibiotics, anti-histamines, anti-ulcerants, retrovirals, cardio-vascular, oncology, neuro-psychiatric drugs and nutraceuticals. All the formulations in various dosage forms are outsourced from Hyderabad, including injectables, Rao pointed out.

Koteswara Rao, who is also the vice-president of the Southern Federation of OPM, said, ‘‘by and large the AP entrepreneurs in the formulations segment are technocrats who have proven zeal to quickly adopt innovative technologies and committed to delivering the goods on time. Another reason for preferring Hyderabad by the companies could be due to the unfavourable conditions in some other states.’’

He said incidentally Andhra Pradesh was the first state in India to introduce an Infrastructure Development Enabling Act to facilitate private sector participation in the development of infrastructure.

‘‘However, a lot more can be done for the pharmaceuticals industry by the state government, for which the OPM has started initiatives with the concerned authorities,’’ he said.

Separate Zone

Rao, who is also the promoter of three formulations companies, suggests the government for the creation of a separate formulations zone with the required infrastructure, and the abolition of pollution certificates for the units as there will be no harmful effluents from formulation units unlike other industries.

He said despite stiff competition and low profit margins, ranging from 5 to 10 per cent, the growth would continue in this sector. ‘‘I foresee bright prospects for this industry in the state, provided some of the measures for its promotion are put in actual practice by the government,’’ Rao added.

The OPM has a total membership of over 150 which is expected to go up to around 200 by March this year. The state has a total of over 250 active formulators, and around 100 active loan licencees.