Pharma's future bright but challenges persist in Gujarat

Ahemdabad: It was raining greenfield investments in the pharma sector of Gujarat — touted as the pharmacy of India over the past three years. Given the resilience shown by pharma manufacturers since the pandemic, the sector in Gujarat has maintained its growth rate and continued to draw fresh investments from large players in addition to luring non-pharma players too.

The Food and Drug Control Administration (FDCA) Gujarat issued at least 1,640 fresh licences to allopathic drug makers in the past three years i.e. 490 in 2020, 559 in 2021 and 551 in 2022. Estimates by industry players indicate this has drawn investments worth at least Rs 10,000 crore into the pharma sector of Gujarat.

Gujarat is now home to at least 4,047 allopathic drug manufacturers. Explaining the trend, HG Koshia, commissioner, FDCA Gujarat, said, “Since the GST rollout, the state has seen a lot of enthusiasm from pharma players who shifted base here from northern and northeastern states as the taxation was uniform . However, the same has increased multifold since COVID, given the resilience shown by the pharma manufacturers here. Several players applied for new product licences for COVID-associated drugs such as favipiravir and remdesivir.”

Industry sources also revealed that many non-pharma players like HOF Furniture and Pashupati Textiles and Sankalp Group have also started formulations manufacturing plants in the last two years. Besides, several existing companies also forayed into API manufacturing to reduce import dependence on China.

With the entry of more players, the competition has gone up and therefore, new entities often find it challenging to penetrate the market, leaving units with underutilized manufacturing capacity.

Established players bid for API manufacturing since COVID-19, with at least 115 new plants getting licences to make manufacture drugs and active pharmaceutical ingredients (APIs), the state is buoyed to witness an investment of Rs 2,000 crore.

The operational companies in the state have a strong base in pharmaceutical formulations and now, APIs are going to be their next big leap. “The pharma industry is highly dependent on China to procure bulk drugs for vitamins, antibiotics, and steroids. The arrival of new API units will reduce imports significantly. Once the API park comes up, bigger companies will invest here,” said Atul Shah, treasurer of IDMAGujarat.

A slew of pharma players is awaiting necessary clearances to start manufacturing units for APIs in Surat, Vadodara, and Ahmedabad, among other locations. On average, about 30 new API manufacturers have obtained licences every year till 2019-20.

This has doubled to 60 per year since COVID, indicates FDCA’s, Gujarat data. Amid disruptions in Chinese supply chains, fluctuations in the domestic industry have affected the pharma companies. If indigenous API production increases in Gujarat, the prices of medicines will come down too, according to stakeholders.

Pharma makers in state make APIs such as cephalosporins, steroids, inorganic salts, proton pump inhibitors, analgesics, antipyretics and anti-inflammatory drugs like paracetamol, Diclofenac sodium, aceclofenac, ibuprofen, anti-hypertensives, anti-diabetics and anti-virals but the key starting materials for most of these are imported.

With new units coming up, the APIs for oncology, hormones, vitamins, steroids and antibiotics, which were earlier imported mainly from China, will be locally manufactured in Gujarat.

“Several pharma sector players are keen on their foray into API manufacturing. Some 1,500 units are currently into producing APIs. However, most are small and medium scale units. The upcoming units will not just augment capacities but also offer APIs for oncology and hormone medicines. This will help reduce India’s imports from China for API manufacturing,” said Shrenik Shah, chairman, Indian Drug Manufacturers’ Association (IDMA), Gujarat chapter.

Non-pharma players turn to pharma since COVID-19, several industrialists from the textiles, chemicals and furniture sectors have forayed into the pharma sector, eyeing better growth prospects.

A financial instruments manufacturer entered the sector recently. “We decided to enter the pharma sector before COVID and started manufacturing during the COVID period. We did so because pharma is a regulated industry. We manufacture tablets and capsules for general medicines. We invested Rs 30 crore in the plant which is suitable for the European marketand hope to start supply in a year,” said Kamal Shah, MD of a pharma firm.

“Several new entrants were keen on exporting to foreign markets. However, due to COVID-19, many plants are still awaiting regulatory approvals. Some of them are therefore turning to contract manufacturing,” said Viranchi Shah, national president, IDMA.