The drug industry in Himachal Pradesh is passing through tough times as it battles an excise duty cut on drugs and shortage of a key raw material, Active Pharmaceutical Ingredients (API). The production and margins have been lower this year on account of these two factors. The excise cut for the rest of the country announced by the government in the Union Budget for the year 2008-09. (This reduces the advantage that Himachal Pradesh enjoys vis-a-vis the rest of the country as it is an excise-free zone)
The shortage of the Active Pharmaceutical Ingredients (API) was the result of China shutting these units due to environmental concerns during the Beijing Olympics.
Arun Rawat, general secretary, Baddi Barotiwala Nalagarh Industries association and the Proprietor of Kanha Biotech says the SME drug industry in Himachal is in a spot of bother.
According to Rawat, the Union Government’s decision to cut excise duty on drugs from 16 per cent to 8 per cent was as jolt for the drug industries operating from excise-free zones. The cut has led to a production-cut in excise-free zones by around 30 per cent.
The units in Baddi were the ones most affected by the shortage of API. Sanjay Guleria, president, Himachal Pradesh Drug Manufacturers Association, adds the shortage of the input material has resulted in decline of production by pharmaceutical companies in the Baddi region. It also resulted in a steep hike in input cost for the drug industry, ultimately affecting their profit margins.
Guleria adds the April-September is considered the profit season for the drug industry, while the remaining months are usually considered the healthy seasons. With the profit season for pharmaceutical industry getting severely affected due to shortage of raw materials, the pharmaceutical industry in the region is definitely in a tight spot.
Over 300 drug units are located in the Baddi Barotiwala area of Himachal Pradesh that houses more than 80 per cent of the state’s SMEs.
