Guj pharma SMEs to benefit from warehouse in Nigeria

Facility to be set up by Pharma Export Promotion Council with subsidy on rentals

Now, Gujarat-based SME pharma exporters can take benefit of warehouses in African countries, helping them reduce logistics costs.

The Pharma Export Promotion Council of India has set the ball rolling for starting a warehouse facility for its members in Lagos in Nigeria, which can help companies that currently export to the African countries.

In a notice on its website, the Council has highlighted the benefits of the scheme, like advanced security provisions, power back-up facilities, internal logistics through approved agencies, apart from additional services like insurance and bank remittances. The Council has also proposed to highly subsidise the rentals of the warehousing facility. The scheme is being set up with support from the Union Ministry of Commerce.

"This is indeed good news for pharma SME companies of Gujarat who export to various countries in the African continent," said Chirag Doshi, chairman of the Gujarat State Board of the Indian Drug Manufacturers Association (IDMA).

African and Latin American countries account for around 60 per cent of net SME pharma exports from Gujarat. The state had exported pharma goods worth Rs 15,000 crore in 2012-13, of which the share of SMEs was around Rs 3,000 crore.

"Nigeria is considered a pharmaceutical hub for neighbouring countries and hence having a warehouse in Nigeria, somewhere near Lagos can be hugely beneficial for companies exporting to nearby countries," said V Shah of Saga Laboratories, which exports oral dosage forms to countries in Africa, Latin America and the Commonwealth of Independent States. He added that logistics costs can be reduced significantly thanks to the local warehousing facility.

Logistics costs account for nearly 35-40 per cent of the total cost of producing any pharmaceutical product, say industry players.

Access to government supported subsidised warehousing facility can reduce the costs by at least 40-50 per cent, Doshi said.

The Council had earlier said that it was looking to set up a warehouse in one of the African countries to help SME exporters. It had also collected data from SME pharma exporters across the country, and taken feedback on the expenditure they incurred on hiring warehouses abroad.

Eventually, the Council chose Lagos as a suitable location for the proposed warehouse. When contacted the Council did not wish to share the investment required to be made on the proposed warehouse, however, a source added that if the Lagos warehouse project was successful, there were plans to set up similar warehouses in other key markets like Latin American countries and other African countries.