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India’s pharma sector remains a challenge for new entrepreneurs

Our Bureau Ahmedabad | Updated on September 11, 2014

Costly installations, stringent regulatory framework plays deterrent for new entrants

Even as contract manufacturing of pharmaceuticals products has provided ample opportunity for small and medium enterprises to attain high growth, the sector remains a distant dream for fresh entrepreneurs.

Costly machinery, stringent regulatory norms and price controls are seen as major deterrent for new entrepreneurs from venturing into pharmaceuticals business including contract manufacturing, which contributes about 50 per cent to the country’s domestic drug business worth Rs 77,000 crore. 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 S V Veerra Mani president, Indian Drug Manufacturers’ Association (IDMA) at the inauguration of fifth edition of “Pharmac India 2014” at Mahatma Mandir in Gandhinagar today.

In the country’s total Rs 1,50,000-crore worth of pharmaceutical production, Gujarat contributes about Rs 50,000 crore or nearly 33 per cent. The state has about 800 pharma manufacturing companies, of which nearly 80 per cent are SMEs.

According to industry experts, government support is required to make contract manufacturing lucrative for entrepreneurs and boost exports from India. Last year, India exported pharma products including formulations and active pharma ingredients (API) wroth Rs 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.

“We have organised Pharmac India with a view to encourage SMEs with focus on contract manufacturing. About 100 companies will participate in the event,” said Kamlesh Patel, chairman, IDMA, Gujarat State Board.

Commenting on future growth prospects of the industry, Viranchi Shah, secretary, IDMA-GSB said, “Earlier, capital required for setting up a small drug manufacturing unit was about Rs 4 crore, but that has increased to Rs 20-25 crore now. In such a scenario, the government is reportedly considering a proposal to launch capital-linked subsidy scheme for new pharma units. Such a kind of scheme is required to spur the growth of the industry and it should be launched as soon as possible."

According to Shah, over the last ten years, Indian pharma sector has registered 1.5 times higher growth rate than the overall GDP growth of the country.

Published on September 11, 2014

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