We are interested in exploring opportunities in upcoming pharma cities

Ashish Pruthi, CMD, Rajasthan Antibiotics Limited (RAL), in an interaction with Prathiba Raju, elaborates on how APIs has become an important arm of the pharma sector and how GST will impact the API industry

Incorporated in 1986 and commenced commercial production in 1991, how has RAL evolved during these years?

RAL is a sterile injectible manufacturing unit and we manufacture sterile APIs. We have recently put up a new plant for sterile formulation as well. This was the first company to launch chloramphenicol sodium succinate in 1991 and the technology was sourced from Europe. RAL has five lyophilisers and crystalline plants to manufacture sterile APIs. Currently, these are the only two technologies available in the international market, which are required to manufacture sterile bulk drugs and RAL has implemented both the technologies at its plant located at Bhiwadi, Rajasthan. Since 2014, we started a new plant for sterile lyophilised vials and dry powder vials. Now, we have three segments — penicillin, cephalosporin, general formulations/ APIs and all injectibles. The Bhiwaidi facility is spread across two acres and we will acquire some more land to set up a third unit with an investment of Rs 15 to 20 crores. It will be a combination plant of formulations and APIs. Last year, we had a turnover of Rs 163 crores and we target to achieve more than Rs 200 crores this year.

How big is the API market in India? What will be the future growth rate and what are the potential growth factors?

It is niche market compared to oral tablet and capsules because these are injections only used in hospitals. It is not for day-to-day use and mainly these are antibiotics. The antibiotics market are growing at the rate of 15 per cent.

You have a presence more in Latin American countries. What is the reason?

In 2008, RAL’s prime focus was Latin America as the demand for the product and market was very conducive. As of now, RAL has 35 per cent export turnover from Latin American countries i.e. ( Rs 30 crores). We want to increase it to 45 to 50 per cent this year by launching the formulations. The main focus countries in Latin America are Argentina, Brazil, Columbia and now we are venturing into Mexico as well. Apart from Latin American countries, RAL has well established clientele in several other countries like Europe, China, Brazil, Indonesia, Bangladesh and the UAE. We are not exploring the US market right now as the registration fee is too high.It is easier to foray into the South East Asian countries and Central America.

Despite India being a leading player in generics, what is the reason for the overall dependence on China for API?

Since the last 30 years, India has seen a faster growth in the pharma industry. When it comes to APIs, Indian pharma companies shifted its focus on high-end formulation where the profit is more. Gradually the focus shifted to China. In order to be self dependent, India has to do backward integration. For example, we plan to start manufacturing products like Tazobactum and Meropenem, which are high-value imports from China. India should emphasise on its own production capabilities and the government should give incentives. The government gives a lot of tax holidays to formulations to create pharma  industrial centre like Baddi. Similarly, the API industry should be incentivised. We are interested in exploring opportunities in the upcoming pharma cities, but we have to check how cost-effective it is. Incentives like cheaper power, common effluent treatment plants,central tax benefits are expected from such pharma cities.

Will GST benefit the Indian pharma manufacturers by rationalising the tax structure and optimising distribution? Which life-saving drugs and APIs  should be exempted from the GST regime?

Five per cent on life saving drugs (zero earlier), 12 per cent on formulations and 18 per cent on APIs are more or less in line with what the industry was expecting but a larger concern for the industry is how the transition to the rates can be done. The rate on APIs prior to GST was also more or less around 18 per cent with other taxes. So, it makes a lotof difference.

What is your take on price capping of drugs by NPPA, as it caps prices for about 376 drugs, under the schedule I of Drug Price Control Order.

We have the cheapest medicine available in India, at the same time we maintain the quality and standards. When there is a price cap on a product everybody focuses on  APIs. Unlike the packaging and other segments, API is the biggest part of pharma sector. So they should let APIs  survive. We manufacture in very highly regulated quality atmosphere and invest a lot in technology.

Which cost-effective measures do you follow while manufacturing high quality and safe medicines?

We are sterile bulk manufacturers and we are into dry filling of the lyophilised or lyophilised viles which is NC2. With our technology and trials we have converted lyophilised vail into lyophilised APIs. It has been a huge success and they are cost-effective. If you do NC2 lyophilisation of a vial you can do a batch size of 20,000 vials a day but with our product pre-lyophilised and ready to fill method, we make about 50 to 100 kg product per day and it can fill 100,000 vials a day. More such research is going on for example on teicoplanin, caspofungin, voriconazole.