Malaysia's location, domestic market draw Ranbaxy, Cipla, others

With generous tax laws, incentives and a location ideal for servicing Southeast Asia, Malaysia is drawing new plants from manufacturers looking to expand in those markets.

Watson Pharmaceuticals ($WPI) picked up a Malaysian facility with its acquisition last year of Ascent Pharmahealth, Strides Arcolab's Australia-based generics business. Indian generics makers have been locating there as well, with Cipla Medpro, Dr. Reddy's Laboratories, Biocon and Ranbaxy Laboratories all having plants. Lupin is sizing up Malaysia, CFO Ramesh Swaminathan tells the Business Standard. "Lupin is the largest supplier of anti-tuberculosis drugs to the country and we would look at ramping up our presence in other therapy segments as well."

India has dominated the generics business for some time but with the Chinese government now providing significant support to API and drugmakers there, Indian companies are finding their prices being undercut. They, in turn, are looking for chances to build plants both where costs are lower and growing markets are close by.

Biocon in 2011 started on a $160 million Malaysian facility and Ranbaxy in September said it would build its second plant there. The $40 million facility will employ about 200 and triple Ranbaxy's total output in Malaysia to about 3 billion doses a year when the new facility is fully operational. Ranbaxy already has a plant in Sungai Petani, Kedah, Malaysia, built in 1987, which has more than 300 workers.

Ranbaxy CEO Arun Sawhney explains to the Business Standard that Malaysia is not only a strategic location for Southeast Asia, it is also a strong domestic market because it provides drugs for its hospitals and clinics and favors generics when they are available. "The government of Malaysia provides a favorable climate to the generic pharmaceutical industry."

- read the Business Standard story