Sikkim, known for its picturesque valleys and lush green hills, is a renowned tourist destination. But, if you think that this is its only claim to fame, think again. The small Himalayan state is also home to more than 40 pharma companies. Till 2014-15, the state was able to attract investments worth of $414.73 million and the figures continue to grow.
According to India Brand Equity Foundation (IBEF), between 2011-12 and 2016-17, Gross State Domestic Product (GSDP) expanded at a compound annual growth rate (CAGR) of 11.05 per cent to $ 2.93 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 11.30 per cent to $ 2.58 billion. The Gross State Domestic Product (GSDP) of Sikkim expanded at a high CAGR of 12.18 per cent between 2011-12 and 2017-18. The state has attracted Foreign Direct Investment (FDI) equity inflows worth $4.78 billion during the period April 2000 to June 2018, according to data released by Department of Industrial Policy and Promotion (DIPP).
The state is not so far behind Gujarat, Maharashtra and Baddi in Himachal Pradesh in becoming a hub for the pharma industry.
In fact, Express Pharma’s August 2016 edition carried an article showcasing the state’s emergence as a pharma hub. Recently, Express Pharma organised the Sikkim Pharma Summit: The Gateway to Growth in Gangtok. It also highlighted Sikkim’s rise as a pharma hub. Delegates representing the pharma fraternity who took part in the summit were also optimistic about the states’ initiative in pulling in many pharma companies despite the odds which the state faces.
So what are the factors luring the pharma players to this state? Let’s examine in detail.
Creating a conducive business environment
Hilly terrains with unpredictable weather notwithstanding, Sikkim has been able to attract the attention of pharma companies. According to Edelweiss Securities, the overall revenue for the pharma sector is likely to grow 17 per cent YoY (year-on-year) and PAT 50 per cent YoY. Conducive government policies in Sikkim which offers 100 per cent excise and income tax benefits in addition to freight subsidy is one major reason for this rise.
Dr Supratim Dutta, Professor Head and Coordinator, ADR Monitoring Centre, Department of Pharmacology, Sikkim Manipal Institute of Medical Sciences points out, "The North East Industrial and Investment Promotion Policy (NEIIPP) 2007 has been the major driving force for pharma companies to make investments in the greenfield projects in the state. Benefits provided by the NEIIPP include excise duty and income tax exemptions as well as capital investment subsidies. Additionally, ample availability of land, uninterrupted supply of power, low manufacturing and labour costs provide a conducive environment for the industry."
Deepak Verma, GM, Zuventus Healthcare, informs, "Sikkim contributes approx Inr 10000-15000 crore annually, mostly to the domestic market, that means an average contribution of 10 per cent."
With government strategies focussing more to create a conducive environment for pharma companies to set up their base in the state, P Ramesh, Plant Head, Micro Labs informs that the strategies has been appreciated a lot. He says, "Sikkim has responded extra-ordinarily and performed better than expected. All big pharma giants have ensured their presence in the state and are prospering at a much higher pace than expected."
Economic benefits
Apart from tourism, which adds to the bulk of the revenue, the pharma sector has also been able to add revenues to the state exchequer. Easy availability of labour, lower power and manufacturing costs, amongst others are also reasons why the pharma sector is attracted to the state.
Says Dutta from Sikkim Manipal Institute of Medical Sciences, "Sikkim’s growing economy has improved the living standards and generated employment. The rapidly growing pharma industry has facilitated bolstering downstream SMEs and ancillary units and upgrade skill development."
According to Verma from Zuventus Healthcare, Sikkim has a huge scope for biomass research as the state is abundan...
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