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Indian API producers have to consider an alternate ‘’process centric’’ model

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Girish Malhotra

In the API producer world, catapulting from fourth position to number one, could be considered a miracle, especially for a country that has stepped on the global playing field about eight years ago. However, such a move is not out of the realm of reality. A concerted effort on multiple fronts would be needed. If Indian companies do not adopt the outlined road map, any other country can adopt this road map and change their relative standing. We have to recognise that such a move is filled with challenges that will have pain but considerable elation as well, which in the long run, would overcome the short-term pain.

Some of the major players have been around for more than 25 years but due to profits and opportunities others have joined the fray. Most of the companies in India have followed the model that big pharma companies have used. Majority of the API are fine/specialty chemical that have disease curing value. Since the chemistries are similar they can be executed at any fine/specialty chemical company having the necessary equipment. This allows an easy entry for many chemical companies to become API producers. Companies have used their existing equipment to produce different APIs and although this is a profit making model, it has many shortcomings.

There is major difference between chemicals that are used to improve life style vs. the chemicals that are used to cure diseases. Purity and quality consistency are the utmost requirement for APIs. To ensure the same, quality regulatory bodies have set certain methodologies every company has to follow. Fractional milligrams to few hundred milligrams of the API needed for different diseases requires variable amount of API to serve the need. With many companies producing the same API their processes are inefficient and unsustainable. Economies of scale to have the most optimum process do not exist. API producers are not worried about these as the related costs are passed on the customers.

Indian API producers like others adopted the same model. This model puts emphasis on meeting regulations i.e. they have become ‘regulation centric’. Regulatory compliance is a must and this is where the opportunities lie. For the Indian API producers to become number one, they have to consider an alternate ‘process centric’ model that improves profits, facilitates and even exceeds regulatory compliance. Process centricity results in the most economic process (3) and allows total command of the process. Many of the current challenges should be considerably reduced or eliminated. Economies of scale significantly lower the total business costs i.e. improve profits, regulatory compliance would be facilitated and/or exceeded. Environmental compliance costs are also lowered. Total business process is improved.

Like any other competitive race, companies will have to pick the API/s for which they have the best process and essentially drive their competitors out. This is the down side. Best of the technologies will create world scale plants. Process excellence will exceed regulatory requirements. This strategy implemented across the API spectrum could make India the number one API producer.

Girish Malhotra, President, EPCOT International

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