Kallam Anji Reddy hailedfrom a small village in Guntur district, coastal Andhra Pradesh.

He did a stint with Indian Drugs and Pharmaceutical Ltd (IDPL) in Hyderabad during the 1970s. Soon, the entrepreneur in him took over and he launched Standard Organics Ltd followed by Dr Reddy’s Labs in 1984.

Anji Reddy died this May, but Dr Reddy’s is now a Rs 11,627-crore company and a global brand from Hyderabad.

Inspired by Dr Reddy’s, Aurobindo Pharma was launched in 1986 by another entrepreneur, P. Ramprasad Reddy, from Nellore district. Aurobindo has grown into a Rs 5,855-crore company with an international presence. Others, such as Hetero Drugs, Divis Laboratories, Natco Pharma, Granules and Neuland Labs, have also made a mark in the international pharma arena.

At least three factors are common to the rise of these companies: entrepreneurship, coastal Andhra origins, and Hyderabad.

An entrepreneurial spirit, trained manpower and research lab support have turned Hyderabad into the bulk drugs capital of the country.

Over the past 25 years, Andhra Pradesh has seen considerable development in the pharma sector.

The value of pharmaceutical products manufactured was Rs 15,000 crore, including Rs 7,100 crore in exports, according to data available with the State Department of Industries.

In recent years, turnover and exports have been growing at 22 per cent. In the last decade, however, pollution issues, power shortages and galloping land prices have slowed the sector’s growth.

Incentives offered by neighbouring Maharashtra and Karnataka, as well as Himachal Pradesh (Baddi) and Uttarakhand (Dehra Dun), have led to some migration to these destinations.

Bulk drug hub

Industry captains feel that the creation of a Telangana state will not make much of a difference to the bulk drug industry, which consists of some 200 units in the districts around Hyderabad A pharma special economic zone at Jadcherla, Mahboobnagar, is also coming up with Aurobindo Pharma as the anchor.

“There will be no change as no political party or government can ignore the industry,” said M. Narayana Reddy, Chairman of Virchow Labs and past president of the Bulk Drug Manufacturers Association, speaking to Business Line.

In fact, on various occasions, Telangana Rashtra Samithi chief K. Chandrasekhara Rao and Industries Minister J. Geeta Reddy have assured support to the pharma industry.

Further, the right ecosystem and the availability of a skilled and mature labour force will be a strength for the pharma sector in Hyderabad or the proposed Telanagana State, added Reddy.

Visakhapatnam rising

In the last decade, the pharma industry has also opened up in Visakhapatnam, in coastal AP, thanks to the emergence of the Jawaharlal Nehru Pharma City, promoted by the Ramky Group. After the bifurcation of the State, industrial development in Seemandhra is expected to be driven by this hub.

Japanese giant Eisai Pharma has set up a unit, as have Aurobindo, Hetero, Virchow, Reddy’s and other major companies.

There are, however, some challenges. Visakhapatnam does not enjoy the strengths of Hyderabad in terms of skilled labour and work culture, nor the technical support in terms of research labs.

“The labour force in Visakhapatnam is not mature and there has been a tendency to strike and make unjust demands. Petty leaders or politicians too disturb the work culture,” said the chief of a leading pharma unit in Visakhapatnam.

The future of the industry in both regions will depend on the political will and policy-makers as well, according to Bhaskara Narayan, Chief Financial Officer, Natco Pharma.

However, a strong ecosystem and the presence of many industry units will work in favour of the pharma industry’s development in Telangana, with Seemandhra lagging behind.

naga.gunturi@thehindu.co.in

somasekhar.m@thehindu.co.in

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