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Gujarat's small and medium pharmaceutical exporters are expecting to reduce logistics costs by 50 per cent as the apex pharma export promotion body Pharmexcil is planning to set up common warehouses in African and Latin American countries to help SME pharma companies.
Chirag Doshi, senior official at the Indian Drug Manufacturers Association, Gujarat wing (IDMA) said that the move could mean a lot of potential cost savings for pharma exporters. "We have a meeting with Pharmexcil officials in Mumbai next week, where we would discuss the details of the project. The Pharmexcil is planning to develop common warehouses in countries like Nigeria in Africa and other Latin American countries," he added. These warehouses will help exporters to store their products and distribute them to local distributors as and when required.
While an official communication from Pharmexcil is yet to come to IDMA,Gujarat, the decision, however, has been conveyed. "There would be a huge rush from the state-based exporters to take advantage of the scheme," Doshi said.
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Logistics costs account for around 40 per cent of the final cost of any pharma product. Having a common warehouse would considerably bring down logistics costs by around 50 per cent, Doshi said.
Pharmexcil had collected data from SME pharma exporters and one of the main difficulties being faced by small scale exporters was huge expenditure on using warehouses abroad.
Accordingly, the Union commerce ministry has decided to open warehousing facilities in some key markets like African and Latin American countries.
Nigeria is likely to be the first country where such a common warehouse facility could be started. It is one of the major export markets for Indian pharmaceutical companies, especially SME pharma companies.
Indian is one of the major sources of generic drugs in Nigeria. Exports to this African country has grown by over 30 per cent in the last couple of years ever since the two countries signed a memorandum of understanding on cooperation in the pharmaceutical sector in 2011.
African and Latin American countries account for around 60 per cent of net SME pharma exports from Gujarat, claimed Doshi.
Gujarat exported around Rs 15,000 crore worth pharmaceutical products during 2012-13 and of this the share of SMEs was around Rs 3000 crore, informed 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 emerging markets are becoming popular export destinations because they are relatively easier to penetrate.
Pharmexcil's director general P V Appaji informed that after the Nigerian facility, Pharmexcil will also look at setting up more such warehouses in other countries including those in Latin America and even Europe.
Another Pharmexcil official informed that the council was also considering setting up a warehouse in Japan in the next phase.
The initiative would primarily help states like Gujarat, Maharashtra and Andhra Pradesh, which house huge numbers of SME pharma exporters, IDMA said.
