Prescription For Survival

Andhra Pradesh accounts for nearly one-third of the countrys total bulk drug production of Rs 1,822 crore. And most of this is from the capital city, Hyderabad. It began in the sixties with just a couple of drug manufacturing units. But today, Hyderabad has emerged as one of the major centres of the pharmaceutical industry. It has, in fact, nurtured some of the leading pharmaceutical companies in the country like SOL Pharmaceutical and Dr Reddys Laboratories.

Of the 600 bulk drugs manufacturers and 10,000 formulation units in the country, almost 250 bulk drugs and 1,000 formulations units are located in Andhra Pradesh. The state capital houses 426 of the 600 bulk drugs units.

 

The growth actually came in the eighties with the drug units registering an annual growth rate of around 30 per cent. A number of non-resident Indians like V C Nannapaneni, chairman, Natco group, and V Sreedhar and K Raghunathan, promoters of Nagarjuna Drugs Ltd, invested in their hometown.

While the growth has tapered off in recent years, the reasons that drew drug manufacturers to Hyderabad are still valid. Apart from infrastructural facilities and low production costs, the state has skilled manpower and research facilities. These date back to the Nizams days when his government set up the Central Laboratories of Scientific and Industrial Research, which was taken over by the Council for Scientific and Industrial Research in 1956.

The public sector, Indian Drugs and Pharmaceuticals Ltds Synthetic Drug Plant was the first major drug unit in the state. But it has been overtaken by private sector units. Although it remained healthy till the late seventies, the governments price control regime and high import duty on intermediaries did SDP in. Many of its technologists left to set up their own plants. And the success of these first few private sector units set off a chain reaction.

However, the rampant mushrooming of drug units is now telling on bottomlines, as many have turned sick. Most of the new entrants, especially the medium and small-scale players, had a similar product mix. With supply far exceeding demand, undercutting became the name of the game. For instance, the price of ciprofloxacin crashed from Rs 18,000 a tonne three years ago to Rs 3,000 today.

With no research and development to improve technology and cut costs, the smaller units have gone into the red. Some have been forced to merge or sell out. Sumitra Pharmaceuticals was taken over by Ajay Piramals Nicholas-Piramal while Standard Organics merged with SOL Pharma.

All this has seen leading drug units in Hyderabad, perk up for the new products patent regime. For instance, they are increasing R&D efforts and boosting exports. Dr Reddys Lab has set up the Reddy Research Foundation and filed patents for four derivatives of an anti-diabetic compound.

Natco has tied up with major research institutes to supplement its in-house R&D. These include the Centre for Cellular and Molecular Biology and the Regional Research Laboratory, Jammu.

Is this the right prescription for the future? Only time will tell.