German Remedies Goa Unit Stalled

German Remedies (GRL), the multinational pharmaceutical major, has delayed the commissioning of its 100 per cent export oriented unit (EOU) at Goa for six months. The plant being set up at a cost of Rs 30 crore is exclusively set-up to manufacture tailor-made pharma products for Madaus AG of Germany.

Industry sources claim that the delay is on account of the plant not being set up in accordance with the US FDA norms. The unit was slated for commissioning in March 1998. It is now scheduled for sometime in September this year.

Srinivas Iyer, company secretary, GRL, claims the plant has gone on stream from March 1998, but is operating at a very low capacity utilisation.

 

Consequently to GRL's delay, Madaus has also postponed buying pharmaceutical products, although it has already made an advance payment to the tune of Rs 24.5 crore.

Sources claim that Madaus paid the advance amount sometime in the last fiscal in anticipation of the plant being commissioned in March 1998.

The plant is being constructed within the same premises of GRL's existing unit in Goa and was being funded through debt and internal accruals. The products are to be manufactured at this plant with 100 per cent buy-back agreement by Madaus. The tie-up is for a period of 20 years.

Sources claim that the delay is expected to shoot up the project cost by Rs 5 crore. They claim that the plant was also designed to get a good manufacturing practices (GMP) approval from the European Commission.

It will have an installed capacity to produce 3,000 tonne of pharma products for the overseas market.

Madaus will buy back and market the products internationally. Srinivas did not disclose the exports in value terms and said the revenue from the plant operations will be generated only through processing charges.

GRL, which is formed by a consortium of six multinational pharma majors, has products such as Deriphyllin, which contributes around 25 per cent of the its turnover. The firm's other products are Endoxan, Kamilosan cream and Honvan, a prostatic cancer drug. In the current year, the company has set a sales target of Rs 190 crore. Sources said, sales from the Madaus project is not included in the sales target.