As many as 11 pharmaceuticals and biotech special economic zones are sprouting in the country as big guns like Ranbaxy Laboratories, Dr Reddy's and Cipla seek scale through these export-oriented tax havens.
Jubilant Organosys, Divi Labs, Biocon, Zydus Finance and the Maharashtra Industrial development Corporation have also jumped on to the bandwagon to capitalise on the outsourcing potential offered by contract research and manufacturing.
Ranbaxy is setting up an SEZ in Mohali, near Chandigarh, spread over 80 acres with an investment of Rs 265 crore (Rs 2.65 billion).
Dr Reddy's has an approval for a 146-acre pharmaceuticals SEZ in Bahadurpalli, Andhra Pradesh, while Cipla is considering a 100-acre facility near Pune.
Delhi-based Jubilant is coming up with two SEZs - one each for pharmaceuticals and biotech - in Gujarat and Mysore at an estimated investment of over Rs 600 crore (Rs 6 billion).
"Ranbaxy needs to make a lot more investment for different therapeutic areas that we are looking to foray into and even to upscale the existing manufacturing facilities," said Ranbaxy managing director Malvinder M Singh. Through the SEZ, the company is looking to achieve scale with a low-cost manufacturing base.
SEZ operations are exempt from income tax for a block of 10 years, and from Customs duty, excise duty, central sales tax, dividend distribution tax, service tax, minimum alternate tax and all local levies.
Indian pharmaceuticals companies have been acquiring firms abroad, often to gain a front end, and are looking to strengthen the home base.
For smaller companies, the $33-billion CRAM opportunity, projected to rise to $55 billion in four years, is a big attraction. "All of us are gearing up for international business that is in the pipeline," says Amar Lulla, joint managing director, Cipla.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
