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Telangana effect: Pharma firms worried

December 15, 2009 02:59 IST

Hyderabad is likely to lose its status as the pharmaceutical capital of the country if the current political turmoil in Andhra Pradesh continues and the state is bifurcated, according to the head of the Bulk Drug Manufacturers Association (BDMA).

"The industry will be forced to look at other states if it is put under this kind of a psychological pressure. The issue (bifurcation of the state) is unlikely to be solved anytime soon," said Narayana Reddy, president of the BDMA.

He said Karnataka, Himachal Pradesh and Gujarat were likely to get an edge over the state if the turmoil continued. "As businessmen, we go to the state that is more appealing."

A similar view was expressed by Shivaram Prasad, managing director of Auctus Pharma Ltd.

Prasad, who came to Hyderabad from coastal Andhra three decades ago, joined the ranks of successful bulk drug producers in the state capital before setting up another unit in Visakhapatnam. "Not only me, many of my friends in the industry feel that Hyderabad is their home. If the state is bifurcated, Hyderabad should be made independent. Only then we will be able to feel at home and participate in the political process of the fast-emerging metropolis," he said.

The Associated Chambers of Commerce and Industry of India said political instability in the state would be detrimental to growth and might hit flow of investments from domestic and overseas players.

The repercussions of the political crisis are already being felt. An employee of a multinational finance company said his company, which had plans to expand in the state, had kept the proposal on hold.

A major information technology company is also learnt to have kept expansion on hold. However, the chairman of the Confederation of Indian Industry's (CII's) Andhra Region, Y Harish Chandra Prasad, said he had held discussions with leaders of various political parties in Telangana, who assured him that "no existing industry will be touched and new units will be welcomed with a red carpet".

"Bifurcation is not an issue, leadership is," he said.  Meanwhile, the agitation in the state is taking its toll on various businesses. Prasad said the loss could be about Rs 1,000 crore.

When Telangana Rashtra Samithi president K Chandrasekhara Rao was on a 'fast-unto-death', a shutdown was observed in the region for three days. Consequently, the pharmaceutical companies in the state capital incurred an estimated loss of Rs 300 crore.

Though normalcy has been restored in Telangana, the ongoing agitation in Andhra and Rayalaseema regions is affecting the operations of bulk drugs manufacturing units. The BDMA president said the bandh being observed for the past three days in non-Telangana districts had resulted in shortage of raw material, particularly in Hyderabad and Visakhapatnam, as lorries carrying the material were stuck on the way.

Hyderabad Goods Transport Association President Pawan Kumar Gupta said only 25 per cent of the 3,000 trucks that start from the state capital were running. Operations to coastal Andhra, Rayalaseema, Chennai, Bangalore and Trichy have been affected.

Pharma companies envisage a major raw material shortage if the stir continues for a few more days. The Auctus Pharma chief said his company was not being able to meet its export deadlines.

The state-owned AP Road Transport Corporation has suffered a loss of over Rs 20 crore due to suspension of services. The loss on Sunday itself was estimated at Rs 4 crore, the corporation's Executive Director, P Narayanaswamy, said, adding if the damage caused to the buses was taken into account, the loss would be Rs 65 crore .

According to Federation of Andhra Pradesh Chamber of Commerce and Industry General Secretary Rajeswara Rao, the real estate sector was hit more than the manufacturing sector. "The unrest will affect the real estate sector for at least for six months. Many companies will delay their plans," he said.

C H Prashanth Reddy & Krishna Mohan in Hyderabad