"The Indian factory of Hungary's leading pharmaceutical company, Richter Gedeon, has started production this year. The plant was constructed and is operated at smaller costs than if it had been set up in Hungary. The production of intermediates has been underway since the middle of the year and active ingredients will be on the menu as of 2009.Richter reviewed its ingredient capacities in 2003 and found that beyond 2009 even its top output capacity would not be enough. The necessary HUF 16 billion worth of investment scheme, however, was not planed to be carried out in the company's homeland, but rather in China or India, since both locations offered cheaper establishment and operating expenses than Hungary and constructions are usually completed sooner, as well. In the end, Richter chose India and it has started production this year in Vapi, some 180 km north of Mumbai.
In August 2004, Mumbai-based Themis Medicare Ltd. agreed with Richter to set up a joint venture to make active pharmaceutical ingredients (API) and intermediates in India.
The plant was constructed and is operated by this JV called Richter-Themis Medicare Pvt. Ltd., which is owned 51% by Richter. Richter also holds a 7.5% stake in Themis Medicare Ltd., which was founded in 1969.
The Vapi-based facility, with a 225-strong staff, produces intermediates exclusively for Richter and will start the production of active substances in 2009, with the trial run set to be launched in the near future.
The Indian plant was designed to meet the strict production environment (cGMP) and its setup cost amounted to USD 13 m, about half the cost it would have required if it had been built in Hungary and about quarter the sum its construction would have absorbed anywhere in Western Europe.
It is no wonder than nearly all main drug producers have at least one manufacturing capacity in India, without which you simply cannot be competitive in the business. Operating costs at Richter's Vapi plant reach some USD 2.6 m annually, about the half its costs in Hungary. (In Western Europe this would amount to around USD 15 m a year.).
Richter also has ingredients making units in Kõbánya (Budapest) and Dorog in Hungary, mainly steroid active ingredients in the latter."
Source: Portfolio Online Financial Journal
04.12.2007