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Shasun Pharmaceuticals Limited is planning for backward integration by entering into manufacture of intermediates, initially with starting material for some of its key active pharmaceutical ingredients (APIs).
The move is aimed at stopping dependence on Chinese imports for its business. The company is one of the largest manufacturer of pain management drug Ibuprofen, and the plan is expected to help it save costs at a time when the rupee is depreciating against the dollar.
The company will be setting up a manufacturing facility for some of its petroleum products (for its APIs, which are used as ingredients in drugs) at Naidupeta in Andhra Pradesh with an investment of Rs 50 crore.
The facility, under construction on 50-acre land in Naidupeta, is expected to start operations in January, 2013 with an annual capacity of 12,000 tonne of intermediates. It is to be noted that a majority of Indian companies depend on import of Chinese intermediates for manufacturing their drugs.
“Manufacturing intermediates on our own will ensure security of supplies for key raw material than depending on some suppliers in China or other countries. Wherever we have a strategic position on a particular API, we will reduce dependency on imports,” said Abhaya Kumar, managing director, Shasun Pharmaceuticals.
This will not only ensure the security of supply but will also save the cost of raw material import, cost of transport and the blockage of money in huge inventories. The company expects to save the cost of raw material in the range of 10 per cent to 25 per cent, depending on the product, by manufacturing intermediates on its own.
“The value of $10 dollar has gone up from Rs 500 to Rs 560. This is affecting the import costs,” Kumar added.
It may be noted that most of the Indian pharmaceutical companies has been depending on imports of pharmaceutical raw material, especially intermediates, from other countries and a majority of it comes from China.
Initially, Shasun is planning to manufacture starting material for its in-house demand. However, the company is expected to extend the manufacturing to raw material for exports or sales to domestic pharmaceutical companies, he added.
The company, which is planning to open its multipurpose and multi-product green-field facility in Visakhapatnam by March-April 2013, is also looking at a third phase of capacity expansion with a facility for formulations, Kumar said, adding that the location and other details were not yet decided.