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Even as contract manufacturing of pharmaceutical products provides ample opportunity for small and medium enterprises to grow, the sector remains a distant dream for new entrepreneurs.
Prohibitive costs Costly machinery, stringent regulatory norms and price controls are seen as major deterrents for new entrepreneurs from venturing into the pharmaceuticals business, even in contract manufacturing, which contributes about 50 per cent to the country’s ₹77,000-crore domestic drug business. According to industry insiders, contract manufacturing in the country is growing at the rate of 20 per cent per annum.
“This is an industry which is highly regulated with highly controlled prices. Also, it calls for zero defects with stringent regulatory requirements. So, even if we have seen new investments taking place in the sector, no new company has been launched,” said SV Veerra Mani, President, Indian Drug Manufacturers’ Association (IDMA), at the inauguration of fifth edition of “Pharmac India 2014” at the Mahatma Mandir in Gandhinagar here on Thursday. Of the country’s ₹1,50,000-crore pharmaceutical production, Gujarat contributes about ₹50,000 crore, or nearly 33 per cent. The State has about 800 pharma manufacturing companies, of which nearly 80 per cent are SMEs.
Growing exports According to industry experts, Government support is required to make contract manufacturing lucrative for entrepreneurs and to boost exports. Last year, India exported pharma products including formulations and active pharma ingredients (API) worth ₹90,000 crore. India exports pharma products to about 210 countries, with 28 per cent going to the US, 19 per cent to Europe and 19 per cent to Africa.
Commenting on the growth prospects of the industry, Viranchi Shah, Secretary, IDMA-GSB, said, “Earlier, capital required for setting up a small drug manufacturing unit was about ₹4 crore, but that has increased to ₹20-25 crore now. In such a scenario, the Government is reportedly considering a proposal to launch a capital-linked subsidy scheme for new pharma units. This kind of scheme is required to spur growth in the industry and it should be launched as soon as possible.”
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