Chennai floods hit small drug factories, blow to US exports

The tiniest of factories needs to follow strict air and water purity safety standards because their output could be used by an upstream factory exporting to the US.
While auto makers or a machine tools plant can get back quickly after the water-logging, a medicine plant could need a minimum of 10 days, or even weeks, to reconstruct its clean-room environment.
“Besides IT and automobile, Chennai is also home to generic drug ingredients and finished dosage makers. These factories have little visibility because they are contract manufacturers, but many of them supply to known brands,” said J Jayaseelan, chairman for Tamil Nadu, Puducherry and Kerala at the Indian Drug Manufacturers’ Association.
Besides supplying to Indian brands, Tamil Nadu exports over Rs 6,000 crore worth of drugs, about 7% of India’s total drug exports. A large portion of this goes to countries in Africa, Asia and Latin America, dubbed Rest of the World, while about Rs 1,000 crore worth of medicines is shipped to western markets.
Jayaseelan puts the loss due to stoppage of production at Rs 150-200 crore, keeping aside the expenditure small entrepreneurs need to make to get their machinery back in working order.
Chennai’s industry clusters in Perumudivakkam, the industrial estate in Ambattur as well as factories in Puducherry and Cuddalore have been flooded. There are nearly 200 drug plants in and around Chennai and along the coastal belt including including Cuddalore. There are nearly 150 in Puducherry.
Though a formulations hub, Chennai also hosts two of the oldest in the Indian pharmaceutical industry — Orchid Chemicals and Shasun Pharmaceuticals. Both have vertically integrated manufacturing set-ups and large clients.
“There could be a big impact, but that is just for the medium term. There is a good possibility that factories cover up losses as they ramp up production,” said K Raghavendra Rao, who runs the 23-year-old Orchid, which shook off takeover attempts by Ranbaxy but sold some businesses to the US-based Hospira after debt flooded it.
Rao, an industry veteran, said his facilities south of Chennai faced some impact and have been “restarted”, but sterile manufacturing will take its time. Executives at Shasun said the company’s facility at Puducherry was recovering well but the status of the plant in Cuddalore could not be ascertained.
The flooding had impeded flow of drugs to retailers’ shelves in Puducherry, but wholesalers in Chennai say they have managed to reach retailers through the week.
Pharmaceuticals distributors and the Indian Drug Manufacturers’ Association have collected Whitfield’s ointment, used against bacterial infections, in thousands of tubes for disbursement in Chennai and Cuddalore in collaboration with the state health department.
However, on Tuesday, the ointment had gone out of stock with Chennai’s distributor circles, requiring delivery from manufacturers.

Courtesy : Economic Times 


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