Global Pharma Companies Favourite investment destination is Gujarat

Global pharma companies are looking at Gujarat as the potential hub for manufacturing in the country. 

There is no stopping the pharmaceutical and biotechnology industry in Gujarat, which from its glorious past is racing ahead by meeting the needs of era of outsourcing that has of late infused new life into the pharma and biotech industry world over. The pharma industry in Gujarat, which took off in 1907 with Alembic setting up its facility, is now a major contract research and manufacturing services (CRAMS) provider in India contributing significantly (more than $400 million as per various industry analysts) to the country's US $1.21 billion CRAMS market in 2007. The latest distinction as the favourite locale for outsourcing follows its stint as the major exporter of pharmaceuticals and producer of active pharmaceutical ingredients (APIs) in the country.

From the days that saw pharma and biotech industry making its path in the country, Gujarat has used its available resources to the best of its ability to propel the industry and in course of time came to be known as the pharma capital of India. In the process, Gujarat, the jewel of the West, became the first state in India to manufacture active pharmaceutical ingredients (APIs), finished dosage forms and pharmaceutical machineries. Also, as pharma and biotech industry slowly gained ground in the country, this jewel of the West earned the distinction of becoming the first state in the country to embark on preclinical safety and toxicology studies.

Now that pharma and biotech industry in India has established itself on the global market and multinational and foreign pharma companies are looking at the country for possible synergies. In tandem with the country's envious growth in this sector, Gujarat has also made its mark as global pharma hub, readying itself to live up to the expectations of the foreign and multinational pharma companies to vie as an outsourcing partner of choice, at a time when pharma industry is going through a sticky patch due to expiration of patents, lacklustre drug pipelines and spiralling costs of research and development, manufacturing and marketing.

After positioning Gujarat as the potential automobile hub in the country, the global pharma giants’ have lined up expansion plans in the state that may well make it a more prominent pharmaceutical manufacturing hub in the country. Going by the reported figures, Gujarat-based pharma companies currently contribute 40 per cent share to India's total pharma production and over 3,500 manufacturing units are engaged in manufacturing of Allopathic, Ayurvedic, Homeopathic drugs & Cosmetics in the state. And if future plans for pharma companies are something to vouch for, the contribution will only go up in the coming years.

Just recently, Israel’s Teva Pharmaceutical Industries announced that it will enter India through a joint venture (JV) with US-based Proctor & Gamble (P&G). It may be noted here that the JV will set up its first manufacturing facility at Sanand, Gujarat with an initial investment of Rs 250 crore ($44.67 million). In addition, US- based generic pharma manufacturer Amneal Pharmaceuticals has set up a formulations unit and research and development centre near Changodar and plans to start operations out of its facility.

Names like the New Jersey based Apicore LLC and Singapore-headquartered Biosensors International have also expressed their plans to set up base in the state. It is expected that many of these companies will finalise their plans by the 2013 Vibrant Gujarat Summit. So far, 112 memorandum of understanding (MoUs) worth Rs 12,751 crore (US $2.2 billion) have been signed since the first Vibrant Gujarat summit in 2003.

There is no doubt over the fact that the investor-friendly policies of the Narendra Modi-led Gujarat government are one of the major factors in attracting these global names to the state. And keeping in mind the future plans of these global pharma giants, the state will only increase its total contribution to the pharmaceutical industry in times to come.

When contacted industry sources, they pointed out that like many other segments of pharma business, in outsourcing too the state has got certain milestones to boast of. "The Gujarat pharmaceutical industry has carved out a special place for itself over a period of time. In fact, one of the early deals in the area of global contract manufacturing, the recent buzzword in the pharma industry, was accomplished in Gujarat way back in 1996. Hence, Gujarat is emerging a pioneer in this area too," said a leading pharma and biotech player in the state requesting anonymity due to certain technical reasons.

"Gujarat is home to approximately 40 per cent of contract research organisations (CROs) in the country. The state has witnessed action on outsourcing of clinical research activities and drug discovery related services. Globally, contract research is a high growth segment led by increasing outsourcing activities of multinational pharma companies. Gujarat is increasingly emerging as one of the most globally preferred outsourcing/off shoring destinations for pharma.

This trend can be largely attributed to Gujarat's inherent competencies in terms of low manufacturing cost, vast talent pool having excellent chemistry skills, strong support from ancillary i