Sustainability, as a concept is gradually gaining traction in Indian Pharma Inc with a growing realisation that it can have a positive impact on a company’s credibility, enhance shareholder perception and create short- and long-term value, finds Lakshmipriya Nair
Indian Pharma Inc is battling myriad issues on different fronts like increasing pressures to cut costs, improving operational efficiency, dealing with complex regulatory environments, market volatility and managing reputations. In this backdrop, where the pharma industry is faced with unprecedented challenges, sustainability as a concept is gaining greater significance than ever before. Moreover, as businesses which affect countless lives, it has become imperative for pharma companies to become more sustainable entities. This calls for a change in the goals and objectives, vision, mission, strategies, management practices, and operations in pharma organisations.
So, are pharma companies taking proactive steps to assimilate sustainability principles in their organisations? Fortunately, to some extent, yes! Whether it is implementing efficient processes through optimal utilisation of resources, ensuring regulatory compliance, developing tailored programmes to eliminate inefficiencies in their supply chain, better waste disposal systems, implementing measures to conserve energy and water, reducing carbon footprint or constructing greener buildings and facilities, there are some pharma players in India who are taking active strides towards being more environment-friendly. Here are a few examples.
Dr Reddy’s Laboratories – Leading by example
Dr Reddy’s Laboratories (DRL), a pharma major, is one of the few companies in India which releases a Sustainability Report as per Global Reporting Initiative (GRI) guidelines. Reportedly, it was the first Indian pharma company to be registered under the GRI database. DRL’s environmental measures comprise a gamut of initiatives like green chemistry; solvent recovery; waste reduction at source; water and energy audits; water harvesting and recycling.
DRL’s company spokesperson informed, “Our unique approach to sustainability, aligns our values to strategic actions that lead to measurable impact. Building on this steady foundation, we have backed innovative approaches to mitigate and minimise our impact on climate change, manage water resources and improve product stewardship.”
Elaborating on the initiatives, he added, “Through our sustainability programmes, we enhanced the share of clean energy in our energy mix, designed energy-efficient plants, consolidated our cooling towers and augmented our rainwater harvesting capacity. We have expedited our waste management efforts across the spectrum including design, manufacturing and safe disposal.”
DRL’s company website informs that its usage of freshwater per unit sale currently stands at about 35 per cent of what it was about a decade ago. It also informs that energy usage per unit sale has been reduced by 44 per cent, in ten years.
ACG Worldwide – Taking the green route
ACG Worldwide’s capsule manufacturing plant in Pithampur, Madhya Pradesh is an example of the company’s endeavours towards sustainable development.
Envisaged as an eco-friendly project, right from the design and layout stages, the factory boasts of several green features like sockets for charging electric vehicles in parking spaces, energy-efficient lighting fixtures, automated water efficient fixtures to an onsite ETP plant for water treatment, efficient HVAC systems, CFC-free refrigerants and fire suspension systems, Forest Stewardship Council (FSC) certified wood, steps to recycle or reuse construction waste, zero use of volatile organic carbons in the interiors, specially designed roofs with a high solar reflective index, improved indoor air quality as per American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) standards, use of low VOC content paints, sealants and adhesives etc.
The green measures implemented at the ACG facility were recognised with a Gold rating by the Indian Green Building Council (IGBC) LEED, making it the first factory in the Indian pharma industry to receive this distinction.
“We opted for a green facility as a responsible corporate to reduce our energy footprint, learn optimal use and conservation of resources. Building green facilities, conservation of precious natural resources, utilisation of locally available materials and renewable energy sources contributes positively to our sustainability,” states Quateel Ahmad, Chief Marketing Officer, ACG Worldwide as he explains the company’s move to build a green facility.
Sanofi India – Safeguarding the environment
Sanofi India, in line with its mission of ‘reducing carbon footprint and using energy responsibly’, has also adopted several sustainability intitiatives and practices. The company utilises renewable sources of energy for its manufacturing operations. Its manufacturing facility in Ankleshwar, Gujarat has windmills installed to generate renewable power for captive consumption. Similarly, its manufacturing site in Goa generates energy from agro waste. The company claims that effective utilisation of biomass has not only helped it in reducing steam cost and dependance on fossil fuels but also in creating jobs for the local residents.
In an earlier article titled, ‘Going Green’ published by Express Pharma in its June 1-15, 2016 issue, Aparna Thomas, Senior Director – Communications and CSR (India & South Asia), Sanofi India had highlighted the other eco-friendly measures adopted by her company, “At Sanofi, we have adopted the concept of recycling, reprocessing and recovery. Our manufacturing facilities are eco-friendly and undertake the following actions: waste water management, zero liquid discharge, recycling of treated waste water to conserve and reuse water, minimise air emissions, proper scrubbing, dust collector systems to protect the air from pollution, waste management (hazardous and non-hazardous) and disposal via incineration with heat recovery programme (e.g. power generation, water heating, etc.). In addition, we have rigorous inspection and maintenance procedures in place.”
“Safeguarding the environment has now become a greater responsibility for all companies. We are conscious of this and take a number of measures to ensure that we are not only compliant with current regulations, but have also taken adequate steps to run environment-friendly operations,” she further stated. (Read: http://www.expressbpd.com/article/pharma/cover-story/going-green/273379/)
Swati Spentose – Success with zero-discharge
Swati Spentose, a niche API manufacturer, also has a success story to report when it comes to sustainable initiatives. Its manufacturing units in Vapi, an industrial township in Gujarat, boast of high efficiency and environment-friendly operations such as a high purifying water system etc, non-polluting captive effluent treatment facility and full compliance with environment, health and safety guidelines. Even after manufacturing products like phenytoin sodium, the company has achieved zero-discharge by implementing an effective effluent management system at its manufacturing units. This achievement has served as an example for other bulk drugs manufacturers in the highly polluted area of Vapi.
Vishal Jajodia, Chief Executive Officer, Swati Spentose recollects, “When our facility was built in 2007, Gujarat was in a major build up phase by Narendra Modi, our current Prime Minister and former Chief Minister of Gujarat. The government was very strict on environment compliances. They were not issuing any clearances to any facility even if they had environment clearance from Delhi, which we had incidentally. Hence, we were forced to find alternate solutions for zero discharge as a back up. As a result, we learnt and developed skills to create a zero-discharge platform using methods of ultra-filtration. Now, though we have got our load for effluent discharge sanctioned, we go into zero discharge mode once a month to keep us prepared for tomorrow.”
Jajodia feels that sustainability can be achieved only with a mindset change. Any pharma company which is serious about sustainability should identify core human issues like environment compliance or quality product manufacturing for human consumption and its leaders should commit themselves to not only lead these initiatives but also traverse a long journey until the objectives are achieved successfully. He states, “We have a team committed to best environmental compliance, not only for regulatory purposes but also driven by a personal commitment to make this world a better place for the next generation.”
Thus these organisations have already begun their sustainability journey. Yet, these examples are exceptions and not the norm in the Indian pharma industry. Despite its importance, a significantly large number of corporates, inluding those in the pharma sector, have not embedded the principles of sustainability in their business practices. It does not feature as a top priority in the CEOs’ agendas.
Nitin Kalothia, Director, Sustainability Initiatives Practice, Frost & Sullivan points out, “India, as a country, has not been very proactive as compared to other developed and developing nations in adoption of sustainable practices. The pharma sector has not been an exception.”
So, what are the major deterrents to the adoption of sustainable practices in the pharma sector? Let’s take a look.
The cost factor
Green or sustainable measures require higher investments initially and take longer time for return on investments (ROI). This has seriously hindered their adoption at various levels. ACG Worldwide’s Ahmad feels, “One of the deterrents could be the higher investments needed initially for a green facility.”
Naresh V Narasimhan, Architect – Principal, Venkataramanan Associates also points out, “There is a notion that very high additional capex is required in building a green facility. The pay back of the additional investment for a green facility is over the lifecycle of the project and is not immediate, this sometimes works as a deterrent especially in harsh economic conditions.” Vimta Labs facility and Lonza R&D facility in Hyderabad are LEED-certified green pharma facilities built by Venkataramanan Associates, a Bengaluru – based architectural firm.
Kalothia shares a similar perspective, “Presently, most organisations approve and implement projects with an ROI of less than three to four years. As a result, many projects that have the potential for higher savings are deferred or shelved due to its long ROI duration.”
However, Vishu Bhoosnurmath, Managing Director, Vishva Protech clarifies, “The initial capital investment may be marginally higher. However, the life-cycle costs for five years are much less in comparison to conventional solutions.” Vishva Protech is a green technology solutions like green fume hoods, ductless storage cabinets, disposable glove boxes, clean air lab enclosures, PCR workstations etc. Bhoosnurmath informs that his company’s products are installed at pharma firms such as DRL, Biocon, Cipla and Mylan.
Lack of awareness
“Knowledge and awareness of sustainable development practices amongst the employees is low and top management’s commitment to these initiatives is not adequate,” says Kalothia.
Narasimhan also points out, “There are cases where there is lack of and/ or less awareness in the team working on the project or the stakeholders regarding the sustainability concepts and its advantages. This, in turn, breeds a mental block when green concepts are suggested to them resulting in adherence to the traditional methods only.”
Narasimhan believes that outdated notions and old habits are also preventing companies from initiating sustainability measures. He explains, “One of the prime advantages of a green facility is savings on the energy consumptions. However measures on saving energy always challenges the old engineering habits which is deep rooted in the industry. This is one of the main deterrents.”
He further advocates, “The potential of reaping benefits of a green facility is maximised only if the concepts are integrated at the design stage itself rather than finding methods after the system is built. Lack of foresight and not incorporating sustainable measures at the design stage is one key reason the Indian pharma industry faces difficulties in creating green facilities. The other critical factor is not involving the installation contractors in the design stage to ensure that there is enough knowledge transfer happening and sufficient commitment is there to maximise the potential savings in a green facility. This is one of the main gaps which plague the Indian pharma industry.”
Lags in sustainability reporting
Sustainability reporting is being adopted as a mainstream activity globally. However, it is not a widespread practice in India. Kalothia highlights, “1,250 companies in China and 630 companies in the US have a sustainability report compared to 170 companies in India.”
The Securities and Exchange Board of India (SEBI) has mandated that the top 500 (earlier 100) companies to be listed on BSE/ NSE have to include business responsibility report (BRR) in their annual report. But the ground realities are quite different. “Among the 35 pharma companies that are required to publish a BRR, less than 25 per cent of these companies have a sustainability report in place today,” informs Kalothia.
Thus, there are several challenges that need to be addressed to propel more companies towards the sustainability route. However, the benefits of being more sustainable outweigh the risks and challenges.
A survey by Arthur D Little, a US management consulting firm, reveals that 83 per cent of global business leaders believe they can deliver significant business values by implementing sustainable development strategy and operations. The pharma sector too can gain out of embarking on a journey towards sustainability and creating awareness mongst the key stakeholders in the industry about the merits of its effective adoption and implementation.
There are several benefits that firms can accrue by embarking on a sustainability journey. They include:
Better risk management: One of the many advantages that organisations gain out of sustainability journey is the ability to identify and manage short and long term risks across economic, environment, operations, supply chain and society. The process drives organisations to identify all kind of risks that can impact its long-term sustainability and helps manage it better, says Kalothia.
Enhanced stakeholder perception and satisfaction: The journey ensures that the company gains more credibilty in the eyes of the stakeholders. Thus, organisations can create a higher level of satisfaction amongst the stakeholders.
Significant cost benefits: Companies can reduce operating costs by reducing energy consumptions per unit of production, by adopting efficient lighting systems, installing energy efficient processes and technology. Many organisations have focused on waste management and are reducing, reusing and recycling waste to generate value out of it. Material management (yield improvement, scrap reduction, etc.) has also reduced the manufacturing cost for few companies.
Gaining competitive advantage: It can help create competitive advantages for organisations by creating eco-friendly products, processes and technologies which would differentiate them from their counterparts and give them a competitive edge.
In times to come
So, what’s in store for the future for Indian pharma where environment sustainability is concerned? Kalothia is optimistic about the future. He opines, “Adoption of green manufacturing practices has been a choice for corporates till date and continues to be so for most organisations, but then that seems to be changing with regulations pushing the agenda harder than before. The new SEBI regulation will push corporates to adopt sustainable development practices. The requirement will be extended to all listed companies in a phased manner and that will result in larger number of companies starting with their sustainability journey.”
Besides, with stricter environmental norms, putting effective sustainability practices have become a matter of regulatory compliance as well. For instance, the Indian government is encouraging pharma companies to explore lesser accessed zones like the North Eastern region to provide better healthcare services to the population. While it is a great opportunity to expand their businesses, it is mandatory for the pharma companies to get clearance on several environmental and safety fronts before setting up their facilities/ units in these regions.
Thus, in times to come, it is to be hoped that pharma players would become more accountable for their actions and pledge their allegiance towards global welfare by becoming more sustainable institutions.