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Sohm: deal is boost for capacity and profitability

By Staff Reporter , 11-Feb-2010
Last updated the 02-Mar-2010 at 16:33 GMT

Generics firm Sohm says deal with manufacturer in Himachal Pradesh doubles capacity, cuts costs 6 per cent and increases profitability.

The firm said the agreement, between its Sohm India unit and an unnamed drug manufacturer, offers a number of benefits, not least its new partners’ location in one for the India’s “tax exempt” regions where export levies are not charged.

Sohm went on to say that the deal doubles its capacity explaining that, in addition to its own roster of products, it will take over the production of 85 drugs made by its partner and market them though its local and US unit.

Shailesh Shah, VP of corporate strategy at Sohm, said the alliance “This will allow SOHM India to fulfill our growing market demand in the coming season and achieve the manufacturing volume growth needed to fulfill purchase orders.

Himachal Pradesh is an area which is declared a tax exempt area by the government of India and this will help to reduce operating costs by almost 6 per cent and increase profitability.”

Tax free attraction

Himachal Pradesh is a “tax exempt” region introduced by the Indian government in recognition of the need to balance promotion of the country’s thriving pharmaceutical industry with the need to raise money from export duties.

Similar tax exemptions for the export of pharmaceutical products apply across the country in areas such as Uttaranchal, Jammu, Northern Eastern States and Kashmir.

The profitability benefits have proved very popular among drugmakers with players such as Piramal Healthcare, Dr Reddy's Laboratories, Ranbaxy, Alkem, Sun Pharma, Zydus Cadila, Cipla and Mankind Pharma setting up in one or more of the regions.

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