India's Wockhardt to Abandon Contract Manufacturing

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Typifying a growing trend in the Indian sector, medium-sized local drug producer Wockhardt has outlined plans to withdraw from contract manufacturing. In April, the company is due to open a large new production facility in Baddi, in the northern state of Himachal Pradesh. Wockhardt expects the new facility to meet domestic demand for its entire product portfolio of tablets, capsules and injectables.

Company officials attribute the decision to terminate contract manufacturing to the country's excise regime, which imposes a tariff based on each drug's Maximum Retail Price (MRP), or the fixed local selling price as determined by the government. Third-party manufacturing is thus becoming an increasingly unattractive option as the new framework allows for fewer economies of scale, and production may become cheaper in other countries as a result.

Wockhardt may now choose to export only its own product lines, as the Baddi plant has already received initial certification from foreign agencies including Brazil's drug regulator Anvisa. Meanwhile, the company claims to be pressing ahead with efforts to boost R&D amid the expected implementation of India's new intellectual property law.