Pharmacy

When one tries to put the success story of the Indian pharma machinery industry in words/ it can be observed that the establishment was a blessing in disguise, and the sector has cleared the troubles that were laid in the way. Today, the small and large manufacturers are successfully running this industry. The tables have turned with regard to import and the industry stands at the verge of huge achievements. Yet, there are bitter pills to digest when it comes to further growth.

It is rightly said that necessity is the mother of invention, and thinking on these lines it is no surprise that the Indian pharma machinery industry is performing well. Currently valued at $8 billion, it has trudged a tough road of success, and is standing at the verge of a plethora of opportunities. At present, there are 20,000 pharma companies in India with more than 700 small and large pharmaceutical machinery manufacturing   companies. With this significant number of industries manufacturing machines locally, they can cater to almost 95 per cent of the pharma industry's equipment needs. This industry provides the pharma companies a basic advantage of using machinery made in the domestic market in lieu of foreign machines, which are five times more expensive. Because   Indian   pharmaceutical machinery are  inexpensive  and provide quality products, they are in demand locally as well as globally. There is no denying that the industry has seen good growth, but is this only on paper and balance sheets? Are then some sweet bitter pills manufacturec by the industry internally that an eventually making further growth difficult? Industry is high on the growth radar, and they need to clear hurdles that may come in the form o people, government or funds. Then and now

In the 1970s, dearth of foreign funds prompted the government to introduce some high import duties and various import licensing policies, which in turn led the Indian pharma companies to search for local meets. This was the beginning of the surge of the plethora of industries present today. The pharma industry that was heavily dependent on exports in the 60s, became an independent player and how. As Ajay Mehra, Director, ACE Technologies & Packaging Systems Pvt Ltd, mentions, "The Indian pharma machinery industry has come of age and is moving at a very rapid pace to cover in a short span what others have done in the past decades by all kinds of inputs, especially organic and inorganic. There -was a time when no one ever considered the Indian manufacturers to be world class, but now Indian companies are giving international companies a run for their money as technological advances are being embraced by Indian manufacturers at a faster pace to keep up with the maxim survival of the fittest." The industry today is definitely on the correct path; however, there may be some invisible factors that are acting as a hindrance for further growth to permeate through. The industry is able to fulfill a huge range of demand for equipment, and with a positive attitude more favourable results are expected. Avers Mehra, "With more and more pharma companies now realising the benefits of sophisticated technology available worldwide, many are embracing the global technology, while many are still using the traditional equipment that are available in India."

Turning tables

There may be a number of reasons why we   started   manufacturing these machines locally, and how the imposing rules from the government at one stage has acted as a blessing in disguise. It is indeed a marvelous achievement to state that  the industry, which a few decades ago was dependent on imports, is making almost 30 to 40 per cent revenue through exports.

Today, the industry has kept itself almost free of imports. Says Pramod Panchal, Director - Sales and Marketing, JK Industries, "We may need to import technology. European Union (EU)-based technology is in demand, but as far as machinery are concerned, we are self-sufficient." It is good to note that the Indian industry has become similar to the solutions provided by countries like Germany or Italy wherein the entire range of plant, machinery, HVAC and clean room installations, are manufactured.

 However, as Mehra notes, "Equipment that have to be imported till date includes the scientific and analytical

equipment. We can overcome this shortcoming by being open to ideas and being creative and to take calculated risks in inventing equipment that can do the same. There is nothing that cannot be done locally and is seen from the recent advances that our machine industry has taken."

Going global

• Price factor: This definitely acts as a major marketing tool for Indian products. In the commonest of the sense, if one is getting the same product with the same output, one would definitely wish to reduce their cost and opt for such machines. Indian machines are hence being exported globally, and several companies' revenue is thriving on their exports. Informs Mehra, "Recently, all the stalwarts of the industry are relooking at their infrastructures and gearing up to meet the international standards. This has also been possible due to the acceptance of the Indian machinery worldwide as cheaper alternatives to their international counterparts." At the same time, the cost-conscious customer may get allured by machinery not focusing entirely on quality. Customer needs to be alert while making choice, and cannot totally depend on less input.

• Updated technology:   If   one manufacturer can buy a machine having all the latest trends and tricks, locally, why would he turn to imports? It is good to see that the industry has in the past few years tried to match with the latest technical developments globally. As Yogesh Babbar, General Manager, SS Packaging Industries, says, "Our Company is self-sufficient when it comes to procuring or learning new technology. We observe a lot of European technology that is new in the market, and that can be and is brought to the country." Informs Panchal, "The industry can manage technology improvisation on its own. We are coming up with new technology regularly. We are parallel to the new technology and all new machines or technology can be manufactured and learnt by us on our own and we might not need external support [o do this." The industry i,s indeed trying hard to renew or refresh their thought process, and is accepting and embracing change.

Ajay mehra

Director, ace technologies & packaging systems pvt ltd

• Compliance to standards: The surge in demand for 'Made in India'  machinery   overseas   is undeniable. As Mehra informs, "Indian manufacturers are open to changes and are fast learning the trend? of CFR 21, GAMP V, Process Analytical Technology (PAT), etc and are incorporating the changes needed to comply with the latest guidelines also." This definitely leads to an increase in demand for machines. The lead customers for these machines have been from US, Bangladesh and China, Says Panchal,

"The Middle East, especially Iran, holds tremendous potential. However, there are some strict RB1 norms. If RBI would be ready to sanction these duties, it will be a huge step forward for us"

G for growth, G for government

It is good to see that most of the industries are finding a helping hand from the government, which is essential for growth. The Government is viewed on the positive side by most industrial experts. With exports forming a major part of their profits, import and export duties seem satisfactory to them. Panchal says, "The government has been helpful to the industry. They do give a helping hand whenever required." However, a few experts still believe that governments support is not to the fullest. Quips Aasif Khan, Managing Director,   Fabtech    Technologies International Pvt Ltd, "Government can definitely help by increasing the allocation of funds to the industry. Most of the developments seen in the industry are due to the companies doing well on their own and due to the products that they manufacture. They still have [o face hindrances in the form of laws and norms. The government can consider easing norms,   reducing   export   taxes, allocating more funds for R&D specific to this sector." fxperts also believe that the support exists, however, trying to achieve the same gets difficult due to the complexity of the process. Adds Mehra, "The government should encourage new ideas and support the industry with infrastructure and incentives to get brilliant ideas. There are policies for the small and medium scale companies to help them move ahead in the growth path, but then the procedures are so tedious that a normal man almost gives up midway Lo utilize those resources.

The government framework is very complex and the rules are such that it offers an umbrella to people who do not need one."        

Getting funds ha-i become easy for* certain players due to their strong balance sheets. As Panchal says, I "With the growth that the industry - has achieved over the years, it) s easy for us to ger support from local banks or  institutions." Companies. Not requiring   financial   support also   exist,   as Rabbar informs, “Our Company is   self-sufficient when it come.-, to procuring or  learning new technology, and we t do not need much fmancial help." But then, several of these companies are in the process of manufacturing the same type of equipment year over year and are happy with their growth. Do they lack the innovation quotient?

Talking    about    the    need to   be   innovative   and    the flow of bright ideas, it is important to note the down side involved for new firms  or  start-ups. Mehra gires an interesting view about this. He adds, "The ability of receiving funds is like the chicken and hen story. A good idea needs to be recognized but to play safe institutions look for established players to fund, hence many a limes good ideas are lost in infancy' stage itself. The process of receiving funds a long drawn process which sometimes outlives the need itself." Small companies might have some brilliant ideas of innovation, but lack of funds might be a huge hindrance for them even today. Avers Khan, "New R&D ideas, novel plans to manufacture new machines should be encouraged to increase the innovation quotient of this industry.

Only with support from a higher body like the government can ideas tom into reality. With the recent growth in this industry it is easier than before id obtain funds, but for setting up a new industry financial institutions and banks are still skeptical and one needs Co provide them bright, new, Trustworthy ideas."

Most serious players in the industry looking to increase their turnover ire hoping that the government will lake a look at the good figures that the industry is showing on paper, and come forward to help. So, what more can the government do? Says Mehra, "If they can offer incentives to machine manufacturers who invest in development of machines, which distinctly bring about a significant differentiation in the manufacturing process in the pharma industry, thereby boosting the keenness to be innovative and progressive. Something similar to what [hey offer to R&D's in the pharma companies." In the same vein. Khan says, "It is easy for a company in the pharma industry to get a turnover of more than Rs. 160 crore, but if you consider a company in the pharma machinery industry, they are generally happy with the how turnovers of Rs. 100 crore or so. They need to understand that they can achieve better growth year after year, provided they can receive good support from the government." He further adds an ironic twist to the story, "The   government   spends   close to $3.7 billion as aid to develop the world, but a meager amount of $1UO million can suffice for substantive growth of this industry, and we still lack to get the same."

Growth limiting factors

It is a universally acknowledged fact that the industry is doing well. And industry pundils predict sunny days in the near future. However, certain factors are acting as a hindrance, which may turn into potential selling points if acted upon or looked into. So does the industry have any internal problems’ Profit-driven manufacturers may look into ways of cutting cost and increasing their margins, but one should not compromise on quality. •Say?, Panclial, "It is sad to see that in an important sector like pharma, people are compromising on quality of machines for cost. It will be good if people realize the importance of quality over cost and opt for the right choice." Further, when such machines are exported, it will not present a good picture of the 'Mady in India' tag on the global front.

Babbar   presents   an   almost apologetic view when it comes to this- He mentions that the view point of the industry in general needs a drastic change. And he believes that it is not only the manufacturers to be blamed, it is also the customers. "In our country, companies refrain from going in for new technology. From the machinery point of view, they are not exactly keeping pace with the evolving market. There are several machines available which are US Food and Drug Administration (PDA) compliant, but the industry does not go forward with using them,"

Informs an industry insider, "Recently, after developing a new production plant, an MNC refrained using new technology and opted for old technology for its packaging requirements." Such cases highlight the fact that an increase in the final profit by providing minium inputs is forcing the industry to maintain such options. The industry should definitely think about it and try to opt for new technology. Adding to this, Babbar mentions the need to have better demands from the pharma industry. It is like revising the demand-supply rule. He avers, "Machines which are high in demand globally are sometimes not in demand in our country. This makes it difficult for some manufacturers when they have to manufacture a new machine with no local distribution. The industry should keep pace with the world." For that matter, acceptance of new technology also reflects the good frame of mind of the cos turner. As Mehra says, "The level of inputs that one provides for the manufacturing of the equipment being offered is also important. Highly sophisticated workshops are fast replacing the age old technologies which reflect the changing mind set of manufacturers."

He further adds, "Inspire of the fact that we have come of age to a large extent we still have to cover the last few

miles, which are the most tedious ones. We are still followers and not inventors of technology in many fronts, eg, inspection of products. In India, we always relied and still rely on manpower to do this critical exercise of inspection.

No doubt that human eye cannot be replaced for inspection but then the consistency and stability that can be achieved by machines cannot be discounted. Hence, the world realized that way ahead and developed inspection machines that are still being sought after.7’ several foreign players are playing shop in India, and giving our manufacturers a tough competition.

Pramod panchal

Director- sales and marketing JK industries

Informs Khan, "We are still importing several machines, particularly from Europe- There is a high quality conscious part in the industry that still insists on quality over cost. Such players are buying European machines. However, with recent advances in the Indian machines, and cost advantages, even our locally manufactured machines are in demand.

One other threat comes from the Chinese market. Due to low labour costs, these machines are cheaper than the Indian counterparts.

Thus,   cost-conscious   people   in the industry are still vying for these    machines    giving    some competition to our industry." The solution lies in gearing up to face such competition.  Industry experts strongly believe that the mindset of the present manufacturers needs to change for further growth. They cannot be complacent at this stage. What they have achieved over the past few years might be good, but they need to set their vision to be the best. As Mehra says, "The Indian   manufacturers   need   to understand that p harm a machine manufacturing is not just fabrication of steel but is knowledge-based manufacturing, which provides solutions rather than just equipment. Our manufacturers will have to develop their knowledge base to support the machines such that the customer gets the feeling that he is supported by a strong company rather than a mere fabricator." A similar view is echoed by Khan, as he says, "The Indian machinery industry lacks innovation and R&D in the True sense. One can consider the causing factors as lethargic people and cost- conscious costumer." He continues on the same note and explains why lethargic. "Once a company has started manufacturing a particular type of machine and is doing well, it   typically does   not consider innovation or trying manufacturing better  machines.  After achieving a certain growth, higher capacity machines are  not  manufactured easily. This results in production of a typical set of machines being produced over a period of time, because some become experts in doing the same over and over again.  Next, what it does is, export this machines abroad. It is similar to some good learning institutions that we have in India, wherein they educate and groom the student, and make them valuable enough   for   die   international  market. Post studies, the path they take is only international." Indeed, the observation is on a sad note and needs a thorough retrospection.

What next?

Today, the Indian market is equipped with   latest technology,   enabling availability of a slew of high- quality pharmaceutical machinery and equipment, useful right from production to packaging. After some successful    decades, the industry should set its vision on further growth. The advantage that they have in terms of price, should be backed by offering more reliability, safety, user friendliness, robotics  and  containment,  noise abatement,    documentation, improved external design and validation. Says Panchal, "A good future reckons this industry. People are doing good business and there is an increasing awareness about quality, which will definitely help the industry"   When this bright industry is, surrounded   by   limiting   factory existing so within themselves, what kinds of  solutions  does one see? Mergers and acquisitions? Says Khan "Consider   mergers!   Imagine   the growth when two or three 20-30 crore companies can achieve by merging together. At that time, the™ can think about larger acquisitions and with the availability of larger funds    even    innovations    and technology    development    would become easy."   His   continent.-s, "We desperately need some sort of approval with this industry, similar in lines to those of 'ISO' or ‘GMP guidelines, wherein one can be rest assured of the quality. Major part of the industry at the moment is not quality conscious, and this view needs to be changed for achieving better standards. We need laws or policies   that    encourage   regular quality checks- This would make the process smoother and guarantee a good. Satisfactory result, Mehra concludes on a bright note. He says, "With the ever-growing pharma industry and India being considered as the next formulations hub of the world, this industry is  definitely going to be a force to reckon with." He also adds the last bit of wisdom when he questions, "If one does not so the right seed now then how do they expect to reap the fruits in the future?"

Time will tell whether the industry has sustained the growth that it managed in this decade. But it is good to see the high hope and expectations ' mat the industry holds. The way the tables, have turned over the past years, it will I be worth observing the growth of the backbone of the pharma industry. And as we observe, the key to achieving more growth and profit lies in the hands of the industry, who should be supported with better R&D investments, quality  and effective management skills.

Aasif khan

Managing Director, Fabtech Technologies International Pvt Ltd