Maharashtra: A manufacturing hub

Located in the western region (western coast), Maharashtra is the third

largest state of the country and has the largest economy in all states of the country.
Mumbai is the capital of Maharashtra and also know as the financial capital of India,
It is also the base for corporate headquarters for many of major multinational
pharmaceutical and domestic pharmaceutical companies.

Maharashtra emerged as the one of the major centers for the manufacturing and
export of the basic drugs and formulations. Maharashtra is acting as the torch
bearing state for the pharmaceutical industry for India. It almost accounts for the 40
percent of all Indian production of bulk drugs and formulation. The US$ 5 billion
Indian pharmaceutical industry in 2003 is expected to grow to US$ 25 billion by
2010.

The state boasts its well developed transportation and industrial infrastructure as it
has the one of the best road, railway and sea transportation facilities available in
the country. It is well connected by the airports as well; Maharashtra has 10 cities
which have the air connectivity, the main airports being Mumbai, Pune, Nagpur and
Nashik. Maharashtra has the largest installed capacity for the electricity generation
in the country i.e. around 79,721 kWh. All this favorable conditions helped the
pharmaceutical industry to grow in the state.

Some of the major players present in the state are Wockhardt, Nicholas Piramal,
Cipla, GlaxoSmithKline, Jhonson and Jhonson, USV Ltd., Pfizer, Sun and Lupin etc.

Grabbing the manufacturing opportunity

The bulk drug industry is highly fragmented and has the large number of
small player in India. Higher manufacturing cost makes western countries to look for
cheaper destination s like India for manufacturing, to grab this opportunity most of
bulk drug and intermediates manufacturing companies are planning to open up or
expand their units in states like Maharashtra, Gujarat, Punjab and Haryana.
Maharashtra being the largest investment spender in the total investment made in
India i.e. around 55%, followed by Madhya Pradesh and Punjab. As Maharashtra has
one of the best physical infrastructure in the country, many of the companies has
opened their manufacturing units in the state’s Pharma-Biotech SEZs .Table 1.1
shows the concentration of the manufacturing units located in Maharashtra.

Table: 1.1

State Number of manufacturing Units %share

Formulation Bulk Total
Drugs
Maharashtra 1928 1211 3139 29.7

Source: Dept of pharmaceuticals (GOI), 2008-09

As state has open specific Pharma- biotech SEZ’s like MIDC Sector Specific Pharma
SEZ for pharmaceuticals at Krushnoor district, Nanded, Wokhardt Infrastructure
Development Ltd., Pharma SEZ and Serum Bio-Pharma Park, Pune, Maharashtra-
Pharma and Bio-technology has allowed pharma corporate to grab the opportunity
of contract manufacturing by setting up their manufacturing units. Government of
Maharashtra has offered various incentive schemes like issuance of allotment order
in 15 days, possession of plot / shed in 7 days, building plans approval in 15 days,
grant of water connection and urban land ceiling permission in 10 days, all this help
Maharashtra to become the manufacturing hub as it is today.

As the state has availability of raw material supplier for API, formulation and
packaging help pharmaceutical companies to grow faster in comparison to other
sates of India.

Research and Development

With the introduction of product patent in India, Pharma companies have

recognized that research as one of the key factor for the long term survival and
growth. Government of Maharashtra is planning to up the biotechnology park near
Pune to boost up the R&D work in the state.
Policy Reforms

For biotechnology Maharashtra government has came up with strong

biotechnology policy in 2001 and after this government of Maharashtra has decided
to set up the biotech park in Hinjewadi in Pune with 136-acre and an Agro biotech
park at Jalna with 100-acre area.

The policy is designed so as to promote the companies to set up their R&D centers
in these parks, it offer the lower tax rate under the value-added tax regime, twice
the existing floor space index (FSI) for biotech units, exemption from stamp duty
and registration fee and 30 per cent of the fixed capital investment are some of the
financial incentives and tax benefits to those who set up biotech units in
Maharashtra. Under the new policy, biotech units can be set up in all regions of the
state and will be eligible for incentives allowed for the state's second least
developed regions.

To monitor the implementation of the mandate placed by the government, state has
appointed Dr. Swati Piramal, executive director, Nicholas Piramal India, for the
newly constituted Maharashtra Biotechnology Commission. The Commission,
constituted under the chairmanship of Dr. R. A. Mashelkar, director general, Council
of Scientific & Industrial Research (CSIR) and Secretary to the Government of India.
The Policy was notified by the Government in January 2002 and is aimed at
promoting Biotech industries in the state.

To sum up the all the state has high level of industrialization that puts forth a sound
base for the externalities to be desired in the setting up of any pharmaceutical
company. Moreover the well developed and established pharmaceutical sector of
the state allows for a new entrant to reap a late entrant advantage of
understanding the extent of the market, the kind and nature of competition,
benefits of the externalities, the benefits of the decreasing returns from state level
investment in infrastructure and industry as a whole etc.