Sikkim turns into a pharma hubEarly this year, when Mumbai-based pharma major Unichem Laboratories was planning to expand its capacity, it was in a fix.

The company’s existing plants at Goa, Ghaziabad and Baddi were already running at full capacity and acquiring additional land in these places would have meant a pretty high investment. At that point of time, the company started to evaluate Sikkim as another potential destination.

Bingo! It took very little effort and time for Unichem to decide on its next manufacturing hub. It was Sikkim. The tax incentives which this hilly state offered on the table were quite attractive and easily comparable to the so-called pharma-hub, Baddi, at Himachal Pradesh. Unichem at one shot decided to invest Rs 30 crore to set up an ultra-modern formulation plant. The plant is now expected to be operational in a couple of months.

Today, Sikkim is home to as many as 14 major pharma companies, which have significant investments in the state. These include the who’s who of Indian pharma sector — Cipla, Sun Pharma, Zydus Cadila, Alembic, IPCA, Alkem Lab, Intas Pharma, Torrent Pharma and of course, Unichem. Industry grapevine suggests even the likes of Lupin is also evaluating the state.

Believe it or not, Sikkim — which is the least populous state in the country and the second-smallest after Goa — has already attracted pharma investment upwards of Rs 2,500 crore. After Gujarat, Goa and Baddi, Sikkim is now attracting the most attention. This could have big implications, considering the fact that the country is the world’s fourth largest producer of pharmaceuticals
by volume.

"Sikkim is a peaceful state and has huge potential for the manufacturing sector. There is minimal interference by the state government. It’s true the state took some time to develop and attract the pharma companies. But now it is surely at a tipping point," says Ramesh Kumar, who heads the Cipla plant at Sikkim. The Cipla unit is spread over 12 acres and has gone on stream since April 2008.

Mumbai-based drug major Sun Pharma completely buys the view. The company has plans to convert its Rs 50-crore Sikkim plant, which became operational since April this year, into a major manufacturing base. Sun Pharma manufactures solid oral finished dosages (read tablets and capsules) of its popular brands like Glucored, Gemer and Cardivas.

"Since the Sikkim plant is expected to be an important supply point for our Indian finished dosage business, going forward, it will be manufacturing a part of our top products too," exclaims a Sun Pharma spokesperson.

The company is also finding labour, power and overall cost of manufacturing to be lower in Sikkim as compared to states like Gujarat and Maharashtra.

Sikkim’s attractiveness lies in the multitude of tax benefits it has on offer. The inclusion of Sikkim under the Centre’s ‘North East Industrial and Investment Promotion Policy, 2007’ in April 2007 did the trick. As part of this, all new units as well as existing units which go in for substantial expansion in Sikkim will be eligible for incentives for a period of ten years from the date of commencement of commercial production. Check out some of the incentives.