Hyderabad is a chief pharmaceutical center with many companies in its pharma cluster like Aurobindo Pharma Limited, Hetero Drugs Limited, Matrix Laboratories, Divis Labs, Dr. Reddy's Laboratories and Vimta Labs.

Though India’s western region is still leading in the pharmaceutical industry, southern India is also fast catching up. The pharma industry cluster in Hyderabad and its nearby cities is approximately worth $1 billion and the annual growth rate is around 20%. In the recent years, Hyderabad has gradually emerged as a leading drug manufacturing city with a strong presence in the global arena.

The pharma industry in the state of Andhra Pradesh contributes more than one third of the total production of the country. During the year 2000-2001, Andhra Pradesh produces formulations and bulk drugs worth US$ 1,150 million and US$ 462 million respectively against the total production of US$ 3.9 billion and US$ 1.66 billion respectively. The state of Andhra Pradesh can be called the pharmaceutical capital of the country. The Central Government has started an initiative called the SME Financing & Development Programme. German Technical Corporation (GTZ), along with Germany’s KFW and UK’s DFID with support from the World Bank are taking part in this initiative. The pharma cluster of Hyderabad will benefit from German Technical Corporation (GTZ) which will assist the Small and Medium Enterprises (SMEs) with financial aid, technical help, marketing and training facilities. GTZ is executing projects in Dehradun, Delhi, Indore and Hyderabad. In Hyderabad, its main focus will be on the pharma cluster, IT & ITES and garment clusters.

Challenges
Environmental issues: The major challenges are the regulations which pose a big challenge for any business and market expansion in the industry, price control of drugs and tax and duties imbalance. North Indian states such as Uttaranchal have deployed a set of fiscal incentives towards promoting investments in the state. This has directly resulted in the shift of the manufacturing base from Gujarat to these regions

These environmental challenges have caused an unfavourable business resulting in higher pressure on the margins and profitability of the firms. This has also shifted the focus of the firms towards compliance rather than trying to improve business processes and investing in IT.

Business process challenges: While the business environment challenges are in the realm of external influences to the cluster, the firms in the pharmaceutical cluster are also facing a number of business process challenges. One common challenge in front of all the companies is the lack of integration of finance with other functions like sales, production and material management.

Project Vikas Initiatives
Project Vikas has planned a number of initiatives to tackle these challenges. Under the project, sensitisation programs are being conducted to help enterprises understand how the challenges before them can be well addressed through use of ICTs.

Project Vikas is also in the process of setting up an e-Readiness Centre in the cluster. Training programmes for the local independent software vendors are being conducted. Workshops for the CxOs and Directors of enterprises on ICT training are also being conducted. Workforce training programmes are also planned.

To enable business development of the enterprises, Project Vikas has envisaged a Web portal which would enable these businesses to connect with other business, and help them find customers as well.