Making Inroads in the Contract Manufacturing Sector



Pharma IQ
07/20/2010

While a number of countries have benefited from the pharmaceutical contract manufacturing sector's global growth, there is still enough evidence to suggest that some have gained more than others.

India appears to be a notable example, with reports originating from the country's Business Standard earlier this year suggesting the industry will enjoy growth of between ten and 15 per cent in the near future, particularly as demand for generic drugs looks set to rise due to the new US healthcare reforms. Companies based in the country also appear to be thriving, with Indian firm Kemwell expanding its operations in the European market by opening its second facility in Sweden.

The rising interest in the sector appears to be rubbing off on other companies, with several seemingly becoming attracted to the prospect of enjoying some of the success that rivals have achieved. DRS Group, which was established in 1991, is one such firm looking to make a breakthrough in what is becoming a highly competitive market.

With clients ranging from LG, Samsung and 3M, the company is best known for its work in the diverse fields of relocation, parcel, cargo, warehousing and social responsibility. However, it has announced plans to take its first steps into pharma contract manufacturing by launching its new DRS Labs division.

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Commencing work with an initial capital of 100 million rupees (£1.47 million), the subsidiary will focus solely on contract manufacturing and is set to be based at a nine-acre state-of-the-art facility built at Medchal in Hyderabad. At present, the new building is equipped to produce over 300 tonnes of medicines in a range of forms, including tablets, capsules, liquids and ointments. In addition, the new site will create employment for around 200 workers, while generating indirect job opportunities for over 300 people.

A K Agarwal, director of DRS Group, suggested that the company is keen to get started on building its profile in the potentially lucrative area of pharmaceutical contract manufacturing. He explained: "There is a huge demand in the contract manufacturing space and with Indian drug manufacturing sector gaining international prominence, we felt this was the right time to launch DRS Labs."

The company does not appear to be seeking a quiet start to life in the sector, with Mr Agarwal adding that its new division is targeting a turnover of 500 million rupees in its first 12 months.

When the new manufacturing facility is up and running, the next step for the company is to receive all of the relevant statutory clearances from specific industry regulators. Once they are received, the DRS Group has stated that its new division will be able to acquire licenses for certain over-the-counter drug products being manufactured at its Hyderabad site.

In addition, DRS Labs has confirmed in a statement that it intends to push forward in discussions with other companies over the acquisition of licences for several products. The ultimate aim will also see the new contract manufacturer launch its own brands in a several treatment areas.

DRS Group's ambitious future plans, as well as its impressive profit target, showcase how companies are identifying pharmaceuticals as rather lucrative. In addition, the experiences of the firm demonstrate how if one country is carving a stronghold for itself in the contract manufacturing, it is India.

It will be interesting to see how close DRS Labs gets in its efforts to meet the expectations, but another notable issue will be seeing just how many companies  across the globe follow in its footsteps by making a move into the sector. If current trends continue, it appears that the competitive pharmaceutical landscape is set to become even more congested in the near future.