Pharma Machinery : Kapil Khandelwal, EquNev Capital, www.equnev.com

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Kapil Khandelwal
EquNev Capital
www.equnev.com

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Pharma Machinery : Kapil Khandelwal, EquNev Capital, www.equnev.com

  1. 1. COVE R S TOR Y The Indian pharmaceutical industry is now being acknowledged as a global outsourcing hub rather than merely a generic drugs market, thanks to its low-cost manufacturing, high-quality research & manufacturing facilities and highly skilled personnel. Moreover, the industry today adheres to all international norms and regulations due to which it has several USFDA-approved facilities. However, Indian pharma machinery manufacturers need to venture into the field of technology transfers and keep pace with the changing technology to increase levels of automation, observes M Neelam Kachhap. 38 Modern Pharmaceuticals August 2009
  2. 2. COV ER STOR Y t he Indian pharmaceutical Arjun Rao industry is metamorphosing. general manager, Shree Bhagwati Pharma Like a butterfly emerging from its cocoon, the There is tremendous scope for machinery pharmaceutical industry is also manufacturers to exploit the potential by shedding its previous image of being providing the necessary machinery with merely a generic drug production proper design, ease of user application, simple market. While generics continue to play a major part in the industry’s maintenance and also validation protocol for success, several companies have started the new equipment. down the long road of drug discovery and branded product development. The Indian pharmaceutical industry licensing policies turned out to be for machinery manufacturers to presents both a competitive threat and a blessing in disguise, as India’s own exploit the potential by providing partnership opportunities owing to its engineering acumen emerged to the necessary machinery with proper low-cost manufacturing, high-quality manufacture pharma machinery at design, ease of user application, simple research & manufacturing facilities and cost-effective rates. maintenance and also validation highly skilled personnel. The industry has come a long way protocol for the new equipment. According to recent industry from being an import-dependent This is essential for pharmaceutical reports, while there are around sector in the 60s and 70s to being an companies. The Indian pharmaceutical 270 large R&D-based pharmaceutical industry with an annual growth rate of machinery industry is currently companies in India – including 14-17 per cent. According to the Indian catering to the segments of tableting, multinationals, government-owned Pharma Machinery Manufacturers capsulation, powder processing, and private companies – there are also Association (IPMMA), there are material handling, R&D equipment around 5,600 small licensed generics more than 800 units manufacturing and instrumentation, coating, bulk manufacturers. However, in reality, pharmaceutical machinery comprising drug plant installation, etc,” says only around 3,000 companies small, medium and large-scale Arjun Rao, general manager, Shree are involved in pharmaceutical enterprises in India. With an estimated Bhagwati Pharma. Evidently, Indian production. Most small firms do not turnover of Rs 2,000 crore, around pharmaceutical machines, which have their own production facilities, 40 per cent is being exported to more have already made a mark in the and operate using the spare capacity than 80 countries around the world domestic market, have also started of other drug manufacturers. including the US, the UK and other making considerable inroads into the Moreover, the advent of European countries. international market. The growing pharmaceutical product patent “In India, there are around acceptance of Indian machines in recognition in January 2005 changed 17,000 pharmaceutical companies. foreign countries is illustrative of the ground rules for Indian companies. Hence, there is tremendous scope this trend. R&D departments are moving away from reverse engineering in favour of developing novel drug delivery systems and discovery research. However, this revolution needs constant support of machine manufacturers, who are matching the steps of pharma manufacturers in providing world-class engineering products. The pharma machinery industry The Indian pharma machinery industry aptly illustrates the well- known idiom, ‘Necessity is the mother of invention’. In the past, hurdles like foreign exchange shortage, heavy import duties and restrictive import August 2009 Modern Pharmaceuticals 39
  3. 3. COVE R S TOR Y In addition, Indian pharma Dr Kamal K Sharma machinery manufacturers have not yet managing director, Lupin Ltd entered the culture of strictly adhering Indian pharma machinery manufacturers to contracts. Hence, they provide better after-sales service and go beyond the have not only been consistently upgrading annual maintenance contract (AMC). themselves but also innovating by investing Moreover, they are flexible in terms in knowledge. They are increasingly studying of deliveries, contractual terms, etc. international market trends to learn best-in-class On the other hand, international practices and bring them to the country. manufacturers do not offer such support to pharma manufacturers. An increasing number of international The Indian pharmaceutical Avers Dr Kamal K Sharma, managing pharmaceutical machine manufacturers machinery manufacturing sector director, Lupin Ltd, “Indian pharma have recognised India’s achievements constitutes around 5-7 per cent of the machinery manufacturers have not and evolution in the industry. Indian global market. In terms of value, more only been consistently upgrading machines are manufactured and used in machines are being imported today themselves but also innovating by accordance with international standards than exported, but in terms of quantity, investing in knowledge. They are and do not fear inspection or approval it is the reverse. Industry experts increasingly studying international of their facility. This is one of the many believe that this is because imported market trends to learn best-in-class reasons that India has the most FDA- machines are more than seven to eight practices and bring them to the approved facilities in the world, only times the value of Indian machines. country. A lot of these manufacturers second to the US. Indian manufacturers still do not make have successfully made inroads into machines requiring high technology or foreign soil, and have managed to Beyond Indian shores laboratory equipment required for R&D. command a sizeable marketshare.” At present, the Indian pharma Hence, the country still needs to import machinery manufacturing industry is these machines. Strengths of the industry poised to take the business to next Looking at the capabilities of According to industry experts, level. The adoption of international Indian engineering companies, Indian machines are very competitively standards and regulations by the Indian many international machine priced as compared to machines pharma industry has played a vital role manufacturers have joined hands from the West and give a good price/ in making machinery manufacturers with them. This has helped the Indian performance ratio. Besides, the labour capable enough to compete in these pharmaceutical industry make further in India is economical and hardworking. territories. Indian pharma machinery advancements in the products and at Due to this, the efficiency output is manufacturers are exploring developed the same time, supply machinery at a comparatively high in India, thus giving markets like the US and Europe with price at least one-fourth or one-third the country a price advantage over much interest. Such markets are of imported machines. other developed nations. defined by standards and criteria that are definitely higher than the domestic market. Regardless of such high benchmarks, Indian pharma machinery players are eying these markets, as the profit margins in exports are considerably higher. In fact Indian companies are exploring opportunities in more speculative markets also. “There are a few who are exploring opportunities in Afghanistan,Turkey, Poland, and CIS countries,”explains Kapil Khandelwal, an independent board member of various companies. And, higher profit margins in exports have boosted innovation or variation among the operational procedures in India. 40 Modern Pharmaceuticals August 2009
  4. 4. COV ER STOR Y Product requisitions are wide- ranging and a few leading Indian Kapil Khandelwal independent board member of various companies machine manufacturers have now developed the skill of providing customised manufacturing and India has an advantage in terms of its offerings packaging solutions to MNC pharma like its design outsourcing services to companies. Development in all areas high-end customisation, after-sales support like infrastructure improvement, R&D, process outsourcing and validation & quality upgradation and understanding of regulatory requirements has been documentation services. noticed. While up to 2004-05, Germany, Italy and South Korea were the major providers of pharma and packaging services,“ states Khandelwal. turn has resulted in increased sales of machinery products & services, its He further adds, “In the latter aspect, high-quality products from India. comparatively low-cost products with the Chinese have limited capability. The rise in joint ventures between assured international quality has now Another area India can tap is the area of foreign and Indian pharmaceutical also brought the Indian industry to the servicing refurbished equipment in drug companies proves that India can fore. Several companies in the quality discovery and the pre-production phase, manufacture world-class products conscious US and European pharma which are dominated by Western players at affordable prices. There are market have started opting for Indian who have little or no presence in this also significant opportunities machinery in recent years, according to part of Asia. The SLA-driven service is a for pharmaceutical plant design industry sources. latent need in the emerging biotech and consultancy and related services, However, this does not give drug discovery sector. While India and especially for large companies India a free arena to play around in China have both emerged as leaders in adopting USFDA and UKMCC the international market. Growing global pharma outsourcing, India offers standards. Overall, being the lowest competition from Chinese firms, which better product quality, while China has cost producer combined with several also provides low-cost machinery to more of a cost-reduction advantage.” FDA-approved plants, India promises the global market, is a challenge faced The implementation of the revised to be a global outsourcing hub for by the Indian industry. Further, the Schedule M, which insists that the pharmaceutical products. increased number of players in India quality of manufacturing machines itself – who negotiate on prices to grab should follow international good Issues within the industry more customers – is another aspect manufacturing practices (GMPs), has Growth in the advancement and that companies are facing at present. also supported most Indian pharma upgradation of technology in machinery However, the quality of Indian products machinery manufacturers. As a result has been fast in India. With almost are superior to that of Chinese ones of the new norms, Indian pharma low technology offerings in the initial and the competition within the Indian companies have to ensure quality stage, the Indian pharma machinery market is healthy for the industry. manufacturing machines, which in industry today is considered as one Several people harbour the misconception that Korea and China are better manufacturing destinations. However, pharma industry is not looking for ‘cheap’ machines, but for a ‘value for money’ proposition, which encompasses many aspects like reliability, support, upgradability, etc. “China has a competitive advantage because of its low-cost mass production of machinery that has no or virtual after sales. India has an advantage in terms of its offerings like its design outsourcing services to high-end customisation, after-sales support process outsourcing and validation & documentation August 2009 Modern Pharmaceuticals 41
  5. 5. COVE R S TOR Y institutes will help the industry have Ajit Singh trained personnel and save time, thus chairman, ACG Worldwide helping the country as a whole. There are many small manufacturers whose quality and reliability are under suspicion. Technology enhancement They sell at a very low price. Due to this, The pharma manufacturing industry can work in sync with pharma overseas customers buy these machines machinery manufacturers. There is and are later dissatisfied. This ruins the no demand-supply gap in terms of reputation of pharmaceutical machinery volumes. Machinery manufacturers manufacturers from India. are meeting the needs of the industry; they simply need to keep pace with that can offer value-added engineering small manufacturers whose quality and the rapidly changing technology with integration of new technologies. reliability are under suspicion. They sell in the international scene. For this, The industry is gearing up to meet at a very low price. Due to this, overseas manufacturers will have to invest in R&D challenges in terms of technology. customers buy these machines and and build their brand. Indian pharma What it requires is a close partnership are later dissatisfied. This ruins the machinery manufacturers also need to with the local pharmaceutical players, reputation of pharmaceutical machinery venture into the field of technology whereby the development will be faster, manufacturers from India.” transfers. The need of the hour is to say industry experts. Also, at times, the The industry has not attracted forge international marketing tie-ups industry goes for a tested product from significant international manufacturers so that they can increase their volumes abroad at double or three times the price to have joint ventures or technology and scale up capacities. than the equivalent product available transfers. Hence, the industry is Further evolution, in terms of locally. Hence, the industry requires continuously working on improving technology and investments is required support in the form of partnerships. the brand image of its products. In the for the machinery sector to truly partner However, some experts feel that engineering space, the industry has the pharma/life science sector. Indian the biggest issue in this segment is been able to overcome this perception pharma machinery manufacturers need that there is very low investment in to some extent. For instance, Pharmalab to upgrade to the latest technologies, R&D and manufacturers do not work has a tie-up with a Finnish company increase levels of automation and in tandem with each other. Hence, it is called Elomatic for engineering design. improve documentation. a fragmented industry comprising Pharmalab gets technical support from small-scale manufacturers. Elomatic and does the engineering Into the future Says Ajit Singh, chairman, ACG design in India. This method of working is Against the background of a Worldwide, “There are many quite inexpensive and profitable. growing economy and exports that Another issue is the lack of trained have doubled annually during the manpower. This was not the scenario last two years, pharma machinery earlier, but nowadays it is a worry. manufacturers are building a new Salaries have risen and this image. The industry is looking forward makes it difficult for small- to the continual support of the scale manufacturers to attract government in terms of exports and in and afford skilled & trained offering incentives for increasing R&D manpower. In order to meet investments. The government can also the specific requirements of play a role in encouraging technology pharma engineering, experts feel transfers and tie-ups. the need for exclusive engineering The key to success for machinery colleges to cater to this subject. manufacturers in the country lies in According to them, industry needs constant improvement in R&D, quality institutes to include pharma engineering and effective management skills. as a subject of expertise. This is because However, the Indian pharma machinery although many of the areas are in line industry has to further grow through with the studies of general engineering, integration and unity among the players a few areas of application in life sciences to grab the maximum potential offered require expertise. Hence, such training by the international market. 42 Modern Pharmaceuticals August 2009

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