The Hindu Business Line : Biocon to make insulin at new plant in Vizag

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Bangalore Feb. 20 Biocon Ltd says the SEZ status of Visakhapatnam's upcoming pharma hub and the significantly lower operational cost it offered had clinched the company's Rs 500-crore decision to fan out to the coastal city in Andhra Pradesh.

"Of all (location) options that we were examining, the SEZ status of Visakhapatnam's Jawahar Pharma City was the first criterion," said Ms Kiran Mazumdar-Shaw, Chairperson and MD of the nearly Rs 800-crore biotech major. "With the current freeze on SEZs, we needed one that was readily available and here was a zoned pharmaceutical area. We wanted to expand to a place that would help our long-term competitiveness for low-value, high-volume products," Ms Mazumdar-Shaw told Business Line.

The greenfield Visakhapatnam plant will be larger than the two older Bangalore plants; it will produce some of its insulin both for conventional and pipeline oral delivery mode — which requires large quantities of water; the packaging will continue in Bangalore. It will also take up biosimilars or generic biotech drugs for exports. The investment will be done over the next five years mostly from internal resources.

Cost benefits

To put up a similar plant in Bangalore, with its zero effluent discharge norm and captive power generation, would mean 50 per cent higher investment over Visakhapatnam, according to Ms Mazumdar-Shaw. It has been promised uninterrupted power, cutting the size of its captive power plant, water at a good rate, and a common treatment plant for semi-treated discharge — which means far lower cost of the ETP. Giving an instance, Ms Mazumdar-Shaw said that at the Biocon Park, a 90-acre SEZ, the ETP and standby power unit took away nearly Rs 100 crore of the investment of Rs 750 crore.

These factors made Visakhapatnam the top draw compared with all the other locations beckoning Biocon, according to its CEO.

Biocon apparently was scouring for new locations for several months and the AP option was in the most advanced stage. "Just as Bangalore's IT giants, and like any growing company, Biocon also has a multi-location strategy." Even if it may seek other pastures, it will continue to be strongly Bangalore-centric, especially for R&D and production of high-value, low-volume drugs, she said.

Biocon has so far invested Rs 1,000 crore in its original home and investments in future projects — monoclonal antibodies for cancer treatment, for example — could be double the amount in the next five years. "Our current employment numbers of 3,000 will also double in 2-3 years," she said.

ORAL INSULIN

The novel oral insulin that Biocon is working on has completed phase 1 trials and is set to begin phase 2 in the next five months.

The bulk medicine for this will be produced at the new facility proposed at Visakhapatnam. The work on the new production centre may start towards the yearend.

Ms Mazumdar-Shaw said she expected the drug to enter phase 3 trials by 2009, by which time the new plant should be ready.

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