Vizag SEZ to see Rs 65cr investments from 3 pharma majors

Three pharmaceutical manufacturing companies, including Dr Reddy's Laboratories, are setting up formulations manufacturing units in the Visakhapatnam Special Economic Zone (VSEZ) at a total investment of close to Rs 65 crore.

These 100 per cent export-oriented units (EOUs) are expected to start exports from 2006-07.

"We have allotted 15 acres of land to Dr Reddy's Labs, 10 acres to Gland Pharma and four acres to Med Chem. The pharma companies will start the construction works of the formulation units during 2005-06. We expect the units to start production and exports from 2006-07," P Ramesh Kumar, development commissioner of VSEZ, told Business Standard.

While Dr Reddy's Labs is making an investment of close to Rs 44 crore into its formulations manufacturing unit at VSEZ, the other two pharma companies are planning to invest Rs 20-21 crore.

Gland Pharma is setting up its unit at VSEZ to manufacture high-value injections, VSEZ sources said.

"Already, Dr Reddy's Labs has the 'trading house status' and exports drugs from VSEZ. In the current fiscal, we expect Rs 2.5-3 crore exports from Dr Reddy's trading house. Once the three new formulations manufacturing units start their exports, the pharma exports from VSEZ are likely to cross the Rs 500-crore mark," Ramesh said.

Drugs manufacturing activity is a strict no-no at the VSEZ due to the environmental problems, and so the pharma majors are setting up only formulations manufacturing units at the zone to avail of the concession and several other export benefits that are in the offing here.

"Apart from this, the land rentals at the zone are very reasonable as compared to that being offered at the proposed Pharma City in Parawada. The state government is offering 25 per cent to 50 per cent concessions on rentals at VSEZ in the first three years. Owing to these reasons, several other pharma companies are also preferring VSEZ to set up their units," he said.

According to Ramesh, Matrix Laboratories too is planning to set up its unit in VSEZ.

"Matrix has asked for 50 acres of land at VSEZ to set up its formulations manufacturing unit. With more and more companies evincing interest to set up their units at the zone, we have asked the government to allot another 200 acres of land for VSEZ," he said.