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PHARMACEUTICAL INDUSTRY In expansion mode

Goa is home to around 78 Indian and MNC pharmaceutical companies, making the state a production hub. The local industry is also an export hub with the largest cluster of exporting plants in the country. Exports comprise nearly 80 per cent of the estimated Rs 8,000 crore state output. The industry is now racing to expand, with companies on way to augmenting capacity, writes Shoma Patnaik
While the Goa government is trying hard to woo large industry, the best response to overtures is from the Indian medicine industry. Pharmaceutical producers are keen to increase exposure to the state and are ready to pump in money to construct new capacities. They have major plans of stepping up local production to take advantage of a booming export market. It is reflected in pending applications for additional land with GIDC where about 40 per cent are from the pharma sector. These include companies like Indoco Remedies, Medispray Lab, Cipla, Geno Pharma, among others. Here, Suresh Kamath, associate vice-president, Unichem Laboratories, who is also the president of Goa Pharmaceutical Manufacturers Association (GPMA), talks about growth plans and other issues. Goa, he says, is the preferred choice of overseas customers while sourcing from India. Unichem, he adds, is also in the process of doubling capacity.
With about 78-odd Indian and MNC pharmaceutical companies in the state, the fact that a production hub exists in Goa is well known. But what is perhaps not known to the lay person is that the local industry is also an export hub with the largest cluster of exporting plants in the country. Exports comprise a chunk of production and it is nearly 80 per cent of the estimated Rs 8,000 crore state output, according to the Goa Pharmaceuticals Manufacturers Association (GPMA).
Since nearly the entire local industry is into overseas sales, their production facilities naturally confirms to the rigorous standards set by overseas US and European markets, point out players. Further, there is continuous investment in upgrading of facilities to increase value addition and meet the demands of the export market.
Meanwhile, ground level information is that the local industry is in a race to expand with companies on way to augmenting capacity. The reasons for it are fundamental, according to A K Burman, production director, Blue Cross Laboratories, Verna. His company has recently signed a tripartite agreement with GIDC to buy an adjacent plot for putting up new plant and more companies wish to do the same. Burman points out that with industry at all-India level expected to benefit from robust demand all companies are eager to expand.
Goa, he adds, has several advantages versus other states. It includes clean industrial environment due to the absence of polluting industry as well as good connectivity via road, rail and sea to the rest of world. Thus, although states such as Madhya Pradesh are rolling out the red carpet to companies, the industry preference is for Goa. Further, most companies follow a policy of expanding in existing location and the presence of several players implies good amount of future investment.
Arun Naik, former president, GPMA, adds that with companies thriving in Goa, it is about time land and other clearances for projects are fast-tracked. Official announcements stating that industry is welcome makes no sense, points out Naik, if land is not available to companies for expansion.
Goa could also become a hub for pharma R and D, says Raj Vaidya, Hindu Pharmacy. It is a brain industry and will greatly benefit graduates from local colleges, he adds.
The drug and pharmaceutical industry in Goa seems to be in expansion mode with several companies either adding capacity or in the way to it. Is that right?
Yes. During last two-three years, major companies like Sanofi, Geno, Colorcon, etc, have completed the expansion programs increasing their capacities to meet ever growing demands of the export from Goa. Recently, companies like BlueCross, Cipla and Unichem are in expansion mode. In addition, the companies are interested in putting research and development centres which will help local talents to get job opportunities in world class facilities.

Where is the expansion taking place in domestic or export market?
The expansion is for both domestic as well as export market. But the majority of expansions that happened during last few years were for export market requirements.

Unlike other industries (for example IT or packaged foods) where Goa as a destination for investment is yet to take root, the pharmaceutical industry seems to have accepted the state wholeheartedly. Why and what are the factors going for it?
Goa identifies the pharmaceutical industry as one of the major industries which is considered as most environmental friendly industrial activities suitable for the state. Indian and MNC formulations companies have already established their plants with various approvals from regulatory bodies worldwide. About 80 per cent of units export to US, EU and rest-of-the-world (ROW) markets. This is a clean industry with a great deal of sophistication and state-of-art-plants and non-polluting as compared to other chemical or agrochemical industries.  Major overseas customers who source the products from India prefer to source from Goa as a first choice.

On the other hand, what are the concerns of companies when they deliberate on Goa as a site for expansion vis-à-vis other states?
The main concern of our industry is availability of land for expansion in Goa for existing companies and other companies who wish to put up their plants. Other concerns are power which is serious in places like Verna Industrial Estate where Reliance has withdrawn supplies and is now being supplied with departmental power through Reliance network at a higher cost and also frequent power shedding in other industrial estates. The captive power generation is very expensive and makes manufacturing operation less cost-effective. In addition, water supply by PWD is another issue which the department is hardly able to meet industry needs for their manufacturing operations. Most of the companies depend on water tankers. In addition, road and communication infrastructure needs to be improved substantially to meet ever growing demand of the industry.

The recent power crisis caused by Reliance Power affected several units, but how is the pharma industry coping with it?
Yes, this crisis has impacted many companies in the Verna industrial belt. The companies need to hire generators to keep the plants running as the pharma industry needs to keep minimum power requirement for uninterrupted supply to stability chambers and other critical installations like storage of products and raw materials which is mandatory from the product safety and efficacy aspects. Hence, the government should consider this situation on a fast track basis to solve the woes of the companies located in Goa.

Is cost of production here an issue vis-à-vis other locations? In other words, is Goa a high cost site for companies?
The cost of production is comparable as to other states as most of the raw materials comes from other states and there are few companies which supply major packaging materials. Hence, most of the materials come from Maharashtra and Gujarat. But the cost of transportation to various destinations is lesser compared to other northern states. Most of the shipments come from Nave Sheva Seaport/Mumbai airport and it is a 12-hour journey from Goa.

Is Goa self-sufficient in manpower at all levels for production? Which are the functions where industry looks for outside talent?
There is big gap between demand and supply of manpower to this industry. This being a specialised industry which produces medicines for the treatment, it requires intensive training before personnel is placed on any activity. It is observed that local youth especially at lower strata prefers tourism and other industries where the skills are not stringent as in pharma industry. Majority of plants try to recruit local talent most of the times at various levels. If not available, they opt to take from other states like Karnataka, Maharashtra, AP, etc. However, for R and D related activities, most of the times requirements are filled up from outside state.

Facilities are in place for the industry to export from the MPT port viz by way of declaring the port as designated port for pharma trade as well as the feeder service from Mormugao to Mumbai. However, response from local industry is slow, why?
Two years back, GPMA took the initiative and successfully notified MPT port for export/import of pharmaceuticals. However, there are only a few takers for this facility due to inadequate feeder vessels available from MPT. In addition, the companies in Goa have other facilities in the rest of India from where goods are transported to Mumbai and pooled to ship to one overseas destination. However, GPMA is driving their members to use the facility in the best possible way in order to reduce the transportation and shipment-related costs and saving natural resources like diesel.

Apart from employment to local pharma grads, what are the other benefits that the state derives from having a robust pharma industry?
There are two pharmacy colleges in Goa and 80 per cent of the students who graduate out from these colleges are girls. Pharmacy graduates need to work in shifts especially in manufacturing and testing functions which deploy them in huge numbers. In addition, there are R and D centres which recruit lots of these graduates in their various departments. Goa has numerous state-of-the-art manufacturing and R and D facilities with latest technology available worldwide. It is a boon for the local pharmacy graduates to get expertise and knowledge for the advancement in their career.

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