Express Pharma

In the pharma fast lane

216

Abhishek Bardhan, Director, Business Development, M+W Group, writes about the opportunities for the pharmaceutical industry in India to compete on a global stage

20151215ep30
Abhishek Bardhan

India has blazed a trail in developing home grown manufacturing centres and the bio-pharma sector is no exception. Prime Minister Narendra Modi flew the flag earlier his year at the Hannover Messe, the world’s largest industry and technology trade fair. The massive presence of Indian companies at the show heralded India as a country that established markets could do business with; insisting that he was committed to introducing a ‘predictable’ business environment in his country. It would seem that the promises made in his pre-election ‘Make in India’ campaign to promote the country as an investment destination and manufacturing centre is beginning to pay off — in a big way. His goal is to market India as an industrial hub for foreign players eager to take advantage of the country’s large workforce, raw materials and infrastructure. This is especially relevant for new technology industries led by pharmaceutical companies including some of the world’s biggest players — and importantly with Indian businesses is the vanguard of manufacturers positioned to develop not just home markets but also creating a global footprint.

20151215ep29

Opportunities for pharma sector

The opportunities for win/ win in best practice and cost control for players in the pharma industry are substantial, especially in India. International businesses have been on the receiving end of a full on assault by the Indian government and an army of financial advisors and business strategists who had placed emerging markets — and India in particular — on the radar for serious investors, due to its impressive growth, strong democracy and developing standards as well as its high numbers of skilled staff. What’s more, India itself is fast tracking its presence on the global pharmaceutical manufacturing scene by deploying smart strategies.

According to figures cited by the Indian government, last year globally, the Indian pharma industry is ranked third largest in volume terms and tenth largest in value terms. The sector is highly knowledge-based and its steady growth is positively affecting the Indian economy. In addition to the relatively low cost-base, the organised nature of the Indian pharma industry is attracting several companies that are finding it viable to increase their operations in the country. In terms of value, exports of Indian pharma products increased at a CAGR of 26.1 per cent to touch $ 10.1 billion during FY06-13.

But, there are some issues that are putting the brakes on an otherwise impressive growth of the indigenous manufacturing base. Currently, the Indian pharma industry is highly fragmented with about 24,000 players (33 per cent in the organised sector). The top ten companies make up for more than a third of the market.

Already major manufacturers based in the sub-continent have flexed their muscles with a flurry of M&A activity, with clearance to enter North America. The US market alone accounted for nearly 30 per cent of India’s medicine exports of $15 billion in the fiscal year through March 2014.

Europe’s reputation for quality and precision finished products, and German engineering excellence in particular, is still the order of the day with emerging markets keen to learn from years of experience. In 2012, Europe’s pharma trade surplus was estimated at €80 billion.

The advantage that India has over other emerging markets is a plethora of highly skilled engineers and technology graduates providing a ready-made low cost labour market. They cover the most sophisticated of manufacturing processes from R&D to world-leading production regimes. This is in sharp contrast with Europe where the skills gap for engineers has placed a premium on such avenues as a precious resource.

Partnership key to BRIC economies

Times are changing, however, with emerging markets gaining a foothold. For many BRIC economies, the question is how they manage to compete on a world stage with the developed regions such as Europe. The answer is simple — through partnerships. Indian pharma manufacturers are leveraging the expertise and brand strength of European engineering organisations to build GMP and cleanroom facilities that