What was the full measure of the disruption caused in the market for pharma lab equipment and instruments industry in India due to the COVID-19 pandemic?
At the beginning of the pandemic, many industries shared a growing concern around service deliveries due to scheduling and planning capacities,as well as logistical capabilities. While the situation brought in challenges for businesses, it also enabled companies to accelerate in areas ofemerging technologies and capabilities.
Agilent started to adopt digital tools to support customers and ensure business continuity with minimal service disruptions. Additionally, regular communication updates on turnaround times of shipment deliveries and other logistic issues were shared with the customers. Agilent supported its healthcare, pharma, and other partners by catering to essential services with installation, maintenance services, and repairs at their site locations.
At Agilent and businesses everywhere, the pandemic has increased the need for – and the acceptance of – digital tools to support business continuity. Agilent has been working on augmented reality to support remote services, and with the evolving situation, it gave us the opportunity to deploy these capabilities. One such solution is the AgilentCrossLab Virtual Assist, which is used extensively to service customers directly for troubleshooting and repairs. This tool also enables service teams to interact and access specialised knowledge.
Collaborations and consolidation are being touted as a way forward for strengthening this industry in India. What are your views on this strategy? Any significant tie-ups, partnerships in the offing for Agilent?
Collaboration between academia and technology providers is key to strengthening and accelerating research. Agilent has been partnering with key institutes to develop new solutions and innovation with purpose. Agilent India collaborated with researchers at IIT Bombay (India) and the QIMR Berghofer Medical Research Institute (Australia) to develop a rapid method for differentiating COVID-19-positive patients expected to show severe symptoms from those likely to experience only mild symptoms.
Furthermore, in March this year, Agilent India collaborated with Gujarat Technological University (GTU) to establish a Center of Excellence (CoE) lab facility at their Ahmedabad premises. This facility will enable the faculty members, students, and Agilent team to study and develop novel applicational workflows in the areas of analytical chemistry, biopharma, and life sciences research. The spirit of collaboration goes beyond just a few projectshere at Agilent; we work closely with our customers in partnership across different industries.
How has this segment shaped over the years, and what are the challenges that it has faced? Please also tell us about how these got amplified by the COVID crisis.
Pharma is a high growth segment for Agilent. Pharma and biotech represented 35 per cent of our overall revenues in FY21, and it kept growing in FY22. When we look at the past years, we made great progress. In Q2 2019, one year before the COVID pandemic started, pharma represented just 30 per cent of our business. It highlights the strength and resilience of this market even with COVID, but it also demonstrates how our innovation and investments in higher growth markets continue to pay off.
We see a great opportunity in the pharma segment. There is a growing demand for biopharma research & development (R&D) and manufacturing worldwide. Rapid growth in nucleic acidbased therapeutics attracted much investment. Where Agilent has had a huge install base in pharma labs in the past years, the small molecule pharma replacement cycle will bring more needs from the segment.
What would be an ideal disaster management framework to protect this segment, if the industry faces similar adverse circumstances in the times to come?
Agilent adjusted quickly to address changing circumstances in the COVID era, not only in the pharma segment but also in other major segments where we are leading. Our resiliency driven by Agilent’s business model and portfolio helped us tremendously and is significantly different from our peers.
For example, we have our service business under a service contract, our whole consumables business, and our Nucleic Acid Solutions Division (NASD) business. These are key highlights of what we’ve been focusing on to transform the nature of our business and deepen market penetration in areas such as pharma, biopharma, which tend not to be as affected by a recessionary pressure if that was to occur.
If we went back to probably 2008-2009, during the great financial crisis, our business was much more capital-intense, much more instrumentoriented than it is today. It was probably in the mid-30s in terms of services and consumables. And today, it’s closer to 60 per cent.
The pharma business is probably more resistant to recession. If we look at what happened during 2020, it’s important to note that Agilent still grew one per cent. We’ve got a much more resilient business model because of the higher concentration, not only in faster and more resilient markets like the pharma business. Additionally, when we look at our portfolio of products and services, our areas of consumables and services area greater proportion of the business than we had before.
However, our team of people are at the forefront of all our hard work. With our ‘One Agilent’ culture, we were able to display our resiliency by implementing our key strategies. With this in mind, we are confident that we can face future challenges and meet them successfully.
What are some short-term and long-term measures that can be adopted to boost the growth of this industry, in the present and the post COVID era?
The pharma industry is growing for Agilent now. In our FY22 Q2 that just finished, pharma represented 37 per cent of our overall revenues this quarter and grew 13 per cent during the quarter YoY, on top of 29 per cent growth last year. For the long-term, we have several strategies to further strengthen our segment:
◆We are continuing to lead the transformation of the analytical lab. We believe customers need to have both: world class scientific outcomes, and efficient and effective management of the lab environment– what we call, “improving the economics of the lab.” At the core of our efforts is our “integrated platform” strategy, where in the labs we will offer intelligent instruments, new customer business models like subscription services, and integrated workflows all in an integrated digital ecosystem.
◆We have built a growing “Double Digit” biopharma business, which focuses on:
● Developing leading analytical tools and workflows
● Building market leadership in oligo-based active pharmaceutical ingredients (APIs) for RNA-based therapeutics
● Integrating Cell Analysis solutions for immunotherapy, biologics research, and cell and gene therapy
◆In the long run, I believe we have a few critical, strategic enablers for the growth of the whole company. These include:
● Our focus on innovation, we keep R&D investment higher than the industry
● Our ability to expand globally
● A successful merger & acquisition (M&A) track record
● Our growing digital capability
All above are built on the foundation of a unique One Agilent culture where we emphasise collaboration, people, and results. I can’t emphasise enough that the Agilent culture is our key winning factor – it makes high performance possible and sustainable over a long period of time.
Can you elaborate on the opportunities in India’s pharma lab instruments market?
India’s healthcare sector has shown tremendous resilience and risen to challenges during the pandemic. India is hailed as the pharmacy of the world and the government has also reoriented its policies towards making the country self-reliant in terms of vaccines, medical drugs, medical devices, and equipment. India’s pharma manufacturing and export markets are poised to further strengthen this position.
Various policies and incentives such as a production-linked incentive scheme for APIs/ key starting materials (KSMs) and medical devices, a scheme for pharmaceuticals, and promotion of bulk drug parks are also being introduced by the government.
These opportunities and growth in the end market will open new doors for lab instrument manufacturers. Focus on drug discovery, R&D, and new international regulations present the need for workflow-based solutions that can deliver unprecedented sensitivity and repeatability while offering ease of use.
Agilent has been at the forefront of providing tailored solutions and workflows for new and emerging application challenges in pharma and biopharma – an example of this is the analysis of mutagenic impurities in recent times. The topic of optimising laboratory efficiencies while keeping costs down is at the forefront of discussions, which presents tremendous opportunities for smart instruments and digitally connected labs.
What will be the key drivers and trends that will shape this market?
Pharma companies are dealing with many changes when it comes to monitoring drug safety and ensuring regulatory compliance. Artificial intelligence and machine learning will fuel an increase in automation in every part of the value chain. We live in a data-driven world, so scientific laboratories must fundamentally transform how they create, manage, and effectively use all the data that is generated in their lab ecosystem.
Achieving and sustaining a competitive edge in a world of constant change will require the continual transformation of lab operations and scientific data management. These are the foundation blocks of the “lab of the future.” It encompasses smart technological workflow systems that are connected and capable of collecting vast amounts of data via integrated automation.
How is Agilent poised to leverage the emerging opportunities in India’s life sciences sector? What are Agilent’s plans for this market in the next three to five years?
Agilent has developed an array of technologies and platforms that have pushed the boundaries in providing solutions that support the needs of our customers. We continue to do this by enhancing the interconnectivity of our solutions, services, and workflow systems. This initiative has already brought certain technologies to life that will play a key role in the next three to five years.
For example: ◆ Asset Monitoring – Agilent CrossLab Asset Monitoring combines advanced IoT sensor technology and data analytics to enable lab-wide visibility
◆ Smart Alerts – Monitors instrument health and provides email-based alerts, notifying lab operators when to consider replacing key consumables, when to perform preventive maintenance, and when an Agilent instrument stops running anywhere in the lab. Digital lab-wide connectivity lets users remotely monitor all their Agilent instruments
◆ SLIMS (Laboratory Workflow Software) – End users can effectively track samples as they progress through the laboratory from sample receipt to automated result reporting
◆ OpenLab Software/Cloud Storage – This has become a viable option for virtually every computing workload in the laboratory, from sample management to complex analytics, to secure data storage and data integrity We have also been working to enable faster, customer-preferred online interactions that improve the ease of doing business and offer alternative buying models, such as flexible payment plans to help our customers acquire the latest technologies while preserving their capital budgets. This suite of future-ready, smart solutions, and customer-centric advanced capabilities will form the core of our strategies going forward as we continue to focus on growth within the pharma and biopharma markets. Inherently, Agilent continues to keep its people and shared knowledge at the center of every strategy.