A special feature to Express Pharma Pulse

Pharma industry’s new growth mantra: Technology investments

The rapid changes in regulatory and global market equations have compelled the pharmaceutical industry to explore newer technological avenues to cut cost and time, ensure operational efficiency, adopt world-class standards and to work out innovative strategies to peg up the bottomline, finds Jayashree Padmini

Domestic pharma major Ranbaxy Industries Ltd has invested $100 million last year in capacity expansion and setting up new plants. Ranbaxy is not alone. Nicholas Piramal, Wockhardt, and Sun Pharma also form part of the bandwagon to have embarked on an inorganic growth strategy to acquire globally competitive size. Acquisition of plants and setting up green field plants overseas has been a key strategy too.

Eye on global market

In the domestic sphere, a close look at the plant upgradation and expansion clearly spells out the strategy of Indian pharmaceutical companies, which is to penetrate the developed markets. ‘‘Almost all the brown field expansions are aimed at tapping foreign markets. India Inc is building up strongholds in the overseas market with an increased acceptance of the ‘Made in India’ tag overseas in the pharmaceutical segment,’’ quote analysts.

According to Pharmaplan India managing director, Dr Ashok Singhal, the investment in the sector would be nothing less than Rs 5000 crore. Pharmaplan undertakes turnkey projects and concept studies apart from GMP audits for the pharmaceutical sector.

Dr Singhal quipped that the industry is eyeing the global market alone while pumping money in manufacturing facilities. US Food and Drug Administration (FDA) standard is the mantra of the key pharma companies running to quench their thirst in markets abroad. Outside USA, it is the Indian pharma sector which is on top, vying for FDA standards in their plants.

More than or close to 50 per cent of revenues of top pharmaceutical companies comes straight from overseas markets. Previously the foray has been to less regulated markets, like the African countries, Eastern Europe, and CIS countries. However, the trend is changing with more focus on regulated markets of US, and Europe and the next stop being Japan. With specialty products and branded generics, this is a crucial shift from the bulks/generics supplier slot.

Upgrade and move ahead

The fast changes in regulatory and global market equations are compelling the pharmaceutical industry to explore newer technological avenues to cut cost and time, ensure operational efficiency, usher in world class standards and to work out innovative strategies to peg up the bottomline. A closer look at the technology profile over the past couple of years will prove that the Indian pharmaceutical industry has been shopping around for technology and skilled top level manpower.

According to new research from the MIT Program on the pharmaceutical industry, many companies today are searching for ways to increase productivity, decrease costs and develop new treatment modalities that will enhance profitability. The trend is not limited to India, it indicates. However, Indian companies are appeared to have undertaken plant upgradation to match global standards only when they are compelled to.

Had they not been eyeing global markets, and had the US FDA not been maintaining stringent quality control norms, may be Indian companies would have cared a damn to invest in newer technologies, quipped an industry observer. To substantiate his statement he pointed out the example of Indian pharma biggies who maintain international standards for their plants where export products are manufactured and their strategy of outsourcing production from small players for the domestic market. This is ridiculous!

Indian drug authorities need to adopt stringent measures, said the source. But the lack of strong political will, will hinder such strong decision-making and to add to this are the implementation hiccups.

Dr Singhal of Pharmaplan who has been instrumental in many pharmaceutical plant expansions observes that upgradation of existing plants is nearly impossible, because these are not made leaving room for upgradation. These plants will require total reconstruction owing to inherent problems in the existing infrastructure.

Industry observers and analysts opine that the new plants being built in tax havens like Himachal Pradesh or J&K are merely to avail of the tax benefits offered. These mainly cater to the domestic market. The major expansion in line with international standards are undertaken not only by top wrung companies but mid-size players like Ind-Swift, Jubilant, Aurobindo, Cadila, Mankind, with an eye on overseas markets. This key strategy has been the major trend in the industry over the past couple of years, pointed out an industry expert.

Manufacturing technology

In line with the pharmaceutical sector, the allied technology supplier also have been witnessing heights. Global players through alliances and own ventures have been setting shop here to cater to the increasing needs of the industry. This new project management companies also have set foot in India. Pharmaplan is an excellent example of such a company that has been growing with the industry. A couple of years into Indian existence, Pharmaplan established office in Bangalore two years ago and is looking at new offices in at least two more locations. US and European companies like the MW Zander, H&G Jacobs, Dalal MacDormatt-Shepherds Process, Bovis Landlease are also sharing the pharmaceutical project pie. Pharmaplan handles about six per cent of the total market, Dr Singhal said.

The technology/equipment supplier has not been sitting idle either, pointed out an industry expert. One-stop-shop is the concept. That means value added engineering with integration of new technologies. One of the preferred model by international companies is to work in collaboration with Indian companies. The emerging collaborations also indicate the thirst of technology companies to cater to the increasing hi-tech requirements of the Indian pharmaceutical industry thus to capture a significant share of the market offering products in the affordable price bracket.

There is an increasing competition in the sector among foreign as well as indigenous engineering/technology companies, and there is an increasing acceptance to Indian vendors. The competitiveness of the indigenous player is gradually opening avenues abroad as well, said and industry analyst.

However, the domestic pharmaceutical sector is yet to catch up with the fast pace of technological intake developed markets, Dr Singhal of Pharmaplan feels. He pointed out that many of the technologies widely used abroad have just started trickling into domestic industry. Computer automation technology (like the SAP) in manufacturing, process automation technologies, robotic technologies, new clean room technologies are a few that fall in the list, he cited.

Packaging technology

The pharmaceutical packaging projected to cross US$18 billion this year has been witnessing fast advances. This is triggered by the changing delivery mechanisms, shifting preference to provide better patient compliance, methods to check spurious/fake drugs, and the compelling legislation across the globe.

Moving from blister packs to plastic bottles/containers and inhalers, the newer delivery routes such as transdermal patches, pulmonary delivery, intravenous drugs & target delivery mechanisms are calling for newer packaging technologies.

The sector demands constant innovation. It also needs to take care of environmental factors, transportation and storage conditions. The packaging industry is continuously deriving mechanisms to provide tailored, individual packaging solutions. This is aimed at ensuring maximum benefit from the medicine administered. Bar coding too has become an integral part of effective packaging facilitating tracking the product and easy recall if needed. This is very crucial in drugs sector where quality is top concern.

When it comes to ensuring quality and consistency for medicines, pharmaceutical companies are adopting advanced methods. The process of upgrading existing product lines to absorb modern technologies also ensures better monitoring, examples include use of robotic toploading solutions, pointed out an industry source.

— jayashreep@expressindia.com