Making Pharma Relevant

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Choksi said since J&K has around 35 pharma companies – 15 of them major, there is urgent requirement for creating a separate zone for them. “Once we get this, we will expand the production base and there will be more exports,” he said. “Now a number of countries are making thorough inspection of the production facilities including the environment they work in before approving the facility for supplies.”

Insiders in the sector said the MFN status that Islamabad has extended to India will pave way for pharma exports. As the state has two zero-duty openings (Chakan ba Bagh and Salamabad), the improved relationship might open these windows for pharmaceuticals as well. “We need to get ready to seize that moment as well,” a senior executive of another major company who wishes to remain anonymous said.

But the facilities are lacking. Most of the companies are keeping the pharma waste in their warehouses because we are waiting for the industries ministry to create a common affluent treatment facility.

“We even lack an independent quality control laboratory in the state,” Kaul regretted. Now the sector is expecting the Central Drug Standard Control Organisation to open a full-fledged office and a fully equipped laboratory.

After New Delhi announced a package of incentives for new industrial investments in J&K in 2002, as many as 15 major companies started operations in various industrial estates of Jammu. These included Cadila, Medley, Lupin, Accent, Sun, Surya, Mini Labs, Pharose Remedies, Vivek, Ind Swift, Ethicare, Amphar and Emcure. Apart from 100 per cent excise duty refund, the package offered capital investment incentive of 15 percent within three million rupees ceiling; full reimbursement of insurance premium on capital investment; and three percent interest subsidy on capital investment besides tax exemptions. Midway, the government restricted the excise duty refund to value the addition only and it reduced pharma sector margins to 56 percent only.

“The cumulative investments in the sector are around Rs 1700 crore,” Kaul said. “We employ upward of 5000 people and our cumulative turnover is Rs 4000 crore a year.” He believes around one-fifth of the production of major units goes off-shore. “There is lot of appetite from the emerging markets but we lack back-up facilities here,” Kaul aid. “Whatever we export goes by air because we lack a suitable and sustainable alternative.”

While there are not many fresh investment proposals on table, the J&K government is accused of not doing anything substantial that would make the sector comfortable and help state ease its unemployment load.

Kaul said the government’s industrial policy suggests us to employ almost 90 per cent of the human resource locally. “But the stuff we are getting from ITI is raw and takes a lot of time to get on-site training,” said Kaul. “We have been suggesting the government to set up a pharmacology college on war footing and the sector will not only help train and teach them but will adjust the graduates as and when they complete their education.”

In absence of such a facility, Choksi said they companies have no option but to hire well-trained human resources from other states. “We can not deploy novices to handle precious machinery that produce drugs for human consumption,” he insisted. Despite this crippling problem, Kaul said they still employ nearly half of the human resource from the state.

Pharma sector is encouraging ancilarization at the local level. While most of the packaging material is being produced and procured locally, Kaul said a bottling plant is coming up and all the companies are going to be its clients. “Unless the investments do not create local stakes, it does not help either way,” Kaul said.

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A journalist with seven years of working experience in Kashmir.

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