Dr Reddy's to set up SEZs

Monday November 27 2006 21:25 IST
HYDERABAD: The pharma industry in the State is set for a big boost as
the pharma major, Dr Reddy's Laboratories, is gearing up to set two
major Special Economic Zones following recent approval from the Centre.

The proposed SEZs will be the first of their kind in Andhra Pradesh and
are expected to fuel further growth in the pharma sector, which is
already in a vibrant state, according to industry pundits.

“We will set up two SEZs in the State. In Hyderabad, the SEZ will be for
formulations while in Srikakulaum, it will be for Active Pharmaceutical
ingredients (APIs),” a senior official of the company told this
website's newspaper.

The SEZ for formulations will be the largest SEZ ever intended for the
pharma industry in the State spanning across over 250 acres.

As the State has already made a mark in formulations, the SEZ, when
completed, is sure to cement the lead the State already enjoys in the
sector.

“By any standard, this is going to be a very large SEZ. We already have
some land at Bahadurpally near Hyderabad and on the lookout for
acquiring more land,” the official told.

The initial investment will be over 600 crore but the total investment
in the SEZ could be well above Rs 1,200 crore.

The company currently is in the process of hammering out other modalities.

The key issues like partnerships and the number of units to be set up
are in the discussion stage, according to sources.

Dr Reddy's will develop the second SEZ, earmarked exclusively for Active
Pharmaceutical Ingredients (APIs) in Srikakulam where it operates a
facility.

According to analysts, the SEZ for APIs will factor in long-term growth.

Needless to say, this will augur well for the State. According to Ernst
& Young's Health Quotient - 2006, vertical integration into APIs is
gathering stream and all major Indian companies would be driven by this
factor.

Already, all major companies including Dr Reddy's are integrated with
strong API cash flows and USFDA approved assets.

Further, in Andhra Pradesh, the SEZ route has been adopted largely for
developing IT and ITeS sectors. The biotech sector in the State had seen
Rs 1000 crore investment up to 2002.

Even going by the same pace, around Rs 6,000 crore investments is likely
in the next five years, according to sources in the Department of
Industries.

With the proposed SEZs in the State, this may go up significantly,
according to sources in the Department of Industries.
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