Karnataka, Goa, Tamil Nadu, and Kerala: Mixed success for southern India’s pharma manufacturing industry

GlobalData Healthcare 28 September 2020 (Last Updated September 28th, 2020 09:16)

Karnataka, Goa, Tamil Nadu, and Kerala: Mixed success for southern India’s pharma manufacturing industry

The four southern states of Karnataka, Tamil Nadu, Goa, and Kerala in India are achieving very different success levels in pharma manufacturing, despite their proximity: Karnataka is a major biologics player and the tiny state of Goa has an outsized manufacturing industry, while Kerala and Tamil Nadu lag behind.

Karnataka has one of the fastest-growing pharmaceutical sectors in India: approximately 40% of the state’s pharma production is exported overseas. The state is an emerging pharma powerhouse, particularly its city of Bangalore, and its success is largely driven by its biologics production. A former Portuguese colony, Goa is geographically tiny but its pharma industry is overrepresented and has ties to European companies. Kerala is a much larger state but has a very underrepresented pharma industry, partly due to a left-wing government not being able to attract businesses. Tamil Nadu has a solid pharma industry but is not as attractive to international pharma companies and innovative companies as its neighbour Karnataka.

Together, the pharma manufacturing industries in the southern Indian states of Karnataka, Tamil Nadu, Goa and Kerala have large merger and acquisition (M&A) potential, given that the majority of pharma facilities belong to companies with a single site in the region.

Karnataka capital Bangalore home to biologics innovation

Well-known pharma companies operate in the state of Karnataka. There are several R&D centres, pharma industrial zones, and exclusive pharma Special Economic Zones (SEZ) to support the developing pharma industry and incentivise international investment. An SEZ is an area with tax and trade laws to encourage the establishment of certain industries. In March 2020, the country announced a mega pharma park will be built in Raichur in Karnataka, along with five others around India.

A large proportion of biotech and international pharma companies in India are located in or around the high-tech city of Bangalore in Karnataka, which is regarded as the “Silicon Valley of India.” Bangalore plans to build a 9M square foot life sciences research park.

The majority of sites in the four southern states offer small molecule manufacture; however, API biologics (protein and peptide) manufacture for the US and EU is also offered at five facilities at Karnataka (clustered around Bangalore) and one facility in Goa (Figure 2). Biocon Ltd (Karnataka, India), Cipla Ltd (Maharashtra, India), Syngene International Ltd (Karnataka, India), Stelis Biopharma Pvt Ltd (Karnataka, India), and Kemwell Biopharma Pvt Ltd (Karnataka, India) have facilities involved in biologic API (protein and peptide) manufacture. All these companies are Indian-owned, apart from Kemwell Biopharma after its acquisition by Recipharm AB (Stockholm, Sweden) in 2016.

The emerging pharma powerhouse of Karnataka has international pharma companies such as Mylan NV (Hertfordshire, UK) and Adcock Ingram Holdings Ltd (Gauteng, South Africa) operating excess capacity contract sites.

Comparing states’ pharma manufacturing activity in India

Karnataka houses the largest number of FDA- and/or European Medicines Agency (EMA)-approved manufacturing facilities, and Tamil Nadu is home to the next largest number of facilities. Goa and Kerala have far fewer facilities: Sangrose Laboratories Pvt Ltd (Kerala, India) owns the only FDA approved facility in Kerala.

Goa is geographically tiny but its pharma industry is overrepresented in terms of facilities compared with the larger states in the southern region. It has existing relationships with Portuguese and other European companies in part because of its status as a former colony. Kerala, by contrast, is larger but underrepresented in the pharma manufacturing industry due to an unfavourable business environment produced by a communist state government. These four states have far fewer facilities than the other southern states of Andhra Pradesh and Telangana (E/MOR, September 2019), which have a combined 248 FDA- and/or EMA-approved sites.

Figure 1: Map of Karnataka, Tamil Nadu, Goa and Kerala.

Credit: GlobalData Contract Service Provider Database (Date accessed: 10 September 2020).

Large pharma companies like Sun Pharmaceutical Industries Ltd (Maharashtra, India) and Mylan NV have manufacturing facilities in Tamil Nadu. The coronavirus outbreak has raised concerns about the availability of API; in March 2020, the Tamil Nadu government responded by announcing plans to construct an API park in Cheyyar, Thiruvannamalai district.

Figure 2: FDA- and/or EMA-Approved Pharma Manufacturing Facilities in Karnataka, Tamil Nadu, Goa and Kerala, India.

india pharma

Credit: GlobalData Contract Service Provider Database (Date accessed: 10 September 2020).

Figure 3: FDA- and/or EMA-Approved Pharmaceutical Facilities per Company in Karnataka, Tamil Nadu, Goa and Kerala.

india pharma

Credit: GlobalData Contract Service Provider Database (Date accessed: 10 September 2020).

The majority of facilities (75%) in these four southern states belong to companies with a single site in the region, which indicates the large merger and acquisition (M&A) potential of the Indian industry.

There are three companies with four or more facilities: Micro Labs Ltd (Karnataka, India), Solara Active Pharma Sciences Ltd (Maharashtra, India), and Mylan NV. Two of these CMOs are headquartered in India. The three companies combined have nine facilities in Karnataka, three facilities in Tamil Nadu, and one in Goa. Solara Active Pharma Sciences Ltd is the only dedicated contract CMO of the three. Mylan NV and Micro Labs Ltd are excess capacity CMOs; therefore, not all of the facilities may be involved in contract manufacture.

Southern India Supplies the US and EU

As Figure 4 shows, most facilities in the four southern states are both FDA-approved and EMA-approved (35 facilities).  There are more than twice as many facilities approved only by the FDA as those that are only EMA-approved. This shows the region’s diversified reliance on US and EU sales. However, there are a substantial number of pharma sites without FDA or EMA approval in Tamil Nadu (39 sites), Karnataka (37 sites), Goa (10 sites), and Kerala (5 sites). This diversification shields the region’s captive and contract manufacturing industry against an impact to a single particular market, such as an increase in protectionist policies. In the US, an executive order issued on August 6 that requires the federal government to purchase some essential, unnamed medicines from domestic manufacturers, dubbed the “Buy American” order, has the potential to disrupt supply chains and reduce Indian-made drug supplies to the US (B/POR, August 2020).

Figure 4: Overlap of EMA- and FDA-Approved Facilities in Karnataka, Tamil Nadu, Goa, and Kerala.

Credit: GlobalData Contract Service Provider Database (Date accessed: 10 September 2020).

India’s workplaces are still badly affected by the COVID-19 crisis, and the southern states are no exception. Karnataka currently has over 100,000 active COVID-19 cases, Tamil Nadu 50,000 cases, Kerala 26,000 cases, and Goa 5,000 active cases as of September 16, 2020.

This analysis primarily covers only FDA- and EMA-approved facilities and uses GlobalData’s Contract Service Providers database, which provides world-class insight into the contract manufacturing industry.