Small pharmaceutical companies in Himachal Pradesh’s Baddi, which is also known as India’s pharma hub, are looking to change hands.
Industrialists say that over-capacity, dependence on large players for orders and absence of own marketing, and withdrawal of tax benefits like excise duty and income tax exemption by the Centre has made their business unviable, pushing them to approach suitable buyers and are also open to joint ventures or mergers. According to the industrialists, the total turnover of the pharma industry, including small, medium and large firms situated in the Baddi-Barotiwala-Nalagarh belt, is about Rs 40,000 crore. There are about 200 small pharma units in the Baddi belt, which accounts for about 75-80 per cent of the total pharma units situated in the region.
Excise duty exemption for these unites expired in March 2010, while income tax benefits expired in March 2012. Moreover, the capital subsidy is set to expire in March 2013.
Speaking to Business Standard, Arun Rawat, president, Baddi-Barotiwala-Nalagarh Industries Association, said, "Small pharma companies which were fully dependent on large players for orders are looking for buyer or mergers. The reason behind this has been the mushrooming of small pharma companies in this region, which has led to over capacity. Only small companies that don’t have their own products are suffering. The expiry of excise and income tax benefits has increased their burden. So, around 10 per cent of the companies are looking for buyers or are open to merger."
