Telangana plans disrupt GSK and Eisai in India

By Gareth Macdonald

- Last updated on GMT

Related tags Andhra pradesh Industry

GSK halted production in Rajahmundry, India and Eisai postponed the opening of a facility in nearby Vizag on Saturday after days of unrest over plans to create a new state, Telangana, within Andhra Pradesh.

The Telangana plan, which has been the subject of heated debate for many years, was passed by the Indian government on December 9 and has become a “mere formality” according to Home Affairs Minister P Chidambaram.

However, while the subsequent resignation of local legislators and members of parliament and ongoing public protests may mean the decision is reversed, the furore it has created is already impacting the drug manufacturing sector.

M Narayana Reddy, former president of the country’s Bulk Drug Manufacturers Association (BDMA), stressed this point in an interview with the Press Trust of India (PTI) on December 12.

Reddy said that, across the region as a whole, the production of drugs, active pharmaceutical ingredients (APIs) and intermediates worth around INR4bn (€58m) has been interrupted.

GSK has now resumed production.

Investment impact

Aside from the manufacturing stoppages, uncertainty about the region’s future, particularly its approach to the taxation, may impact on national and international investment, which is an idea also touched upon by Reddy.

He argued that because “business runs on trust. Even a slightest doubt, in their minds, may create a blockade for investments in the State​.”

Others, however, were less downbeat about the likely impact the creation of Telengna will have on local drug manufacturing industry.

Pennar Industries’ chairman, Nrupender Rao, told the Economic Times​ that key pharma players based in the region such as Dr Reddy’s, Aurobindo and Shantha Biotech are unlikely to move in the short-term.

Rao argued that: “Other industries, largely those in the manufacturing sector, have offices in many parts of the country. Therefore, the creation of a separate state wouldn’t likely have much of an impact.”

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