Kapil Khandelwal QuoteUnquote with KK www.kapilkhandelwal.com

1. COVE R S TOR Y
The Indian pharmaceutical industry
is now being acknowledged as a global
outsourcing hub rather than merely a generic
drugs market, thanks to its low-cost manufacturing,
high-quality research & manufacturing facilities and highly skilled personnel.
Moreover, the industry today adheres to all international norms and regulations due to
which it has several USFDA-approved facilities. However, Indian pharma machinery manufacturers
need to venture into the field of technology transfers and keep pace with the changing
technology to increase levels of automation, observes M Neelam Kachhap.
38 Modern Pharmaceuticals August 2009

2. COV ER STOR Y
t
he Indian pharmaceutical Arjun Rao
industry is metamorphosing. general manager, Shree Bhagwati Pharma
Like a butterfly emerging
from its cocoon, the There is tremendous scope for machinery
pharmaceutical industry is also manufacturers to exploit the potential by
shedding its previous image of being providing the necessary machinery with
merely a generic drug production
proper design, ease of user application, simple
market. While generics continue to
play a major part in the industry’s maintenance and also validation protocol for
success, several companies have started the new equipment.
down the long road of drug discovery
and branded product development.
The Indian pharmaceutical industry licensing policies turned out to be for machinery manufacturers to
presents both a competitive threat and a blessing in disguise, as India’s own exploit the potential by providing
partnership opportunities owing to its engineering acumen emerged to the necessary machinery with proper
low-cost manufacturing, high-quality manufacture pharma machinery at design, ease of user application, simple
research & manufacturing facilities and cost-effective rates. maintenance and also validation
highly skilled personnel. The industry has come a long way protocol for the new equipment.
According to recent industry from being an import-dependent This is essential for pharmaceutical
reports, while there are around sector in the 60s and 70s to being an companies. The Indian pharmaceutical
270 large R&D-based pharmaceutical industry with an annual growth rate of machinery industry is currently
companies in India – including 14-17 per cent. According to the Indian catering to the segments of tableting,
multinationals, government-owned Pharma Machinery Manufacturers capsulation, powder processing,
and private companies – there are also Association (IPMMA), there are material handling, R&D equipment
around 5,600 small licensed generics more than 800 units manufacturing and instrumentation, coating, bulk
manufacturers. However, in reality, pharmaceutical machinery comprising drug plant installation, etc,” says
only around 3,000 companies small, medium and large-scale Arjun Rao, general manager, Shree
are involved in pharmaceutical enterprises in India. With an estimated Bhagwati Pharma. Evidently, Indian
production. Most small firms do not turnover of Rs 2,000 crore, around pharmaceutical machines, which
have their own production facilities, 40 per cent is being exported to more have already made a mark in the
and operate using the spare capacity than 80 countries around the world domestic market, have also started
of other drug manufacturers. including the US, the UK and other making considerable inroads into the
Moreover, the advent of European countries. international market. The growing
pharmaceutical product patent “In India, there are around acceptance of Indian machines in
recognition in January 2005 changed 17,000 pharmaceutical companies. foreign countries is illustrative of
the ground rules for Indian companies. Hence, there is tremendous scope this trend.
R&D departments are moving away
from reverse engineering in favour of
developing novel drug delivery systems
and discovery research. However, this
revolution needs constant support
of machine manufacturers, who
are matching the steps of pharma
manufacturers in providing world-class
engineering products.
The pharma machinery industry
The Indian pharma machinery
industry aptly illustrates the well-
known idiom, ‘Necessity is the mother
of invention’. In the past, hurdles like
foreign exchange shortage, heavy
import duties and restrictive import
August 2009 Modern Pharmaceuticals 39

3. COVE R S TOR Y
In addition, Indian pharma
Dr Kamal K Sharma
machinery manufacturers have not yet
managing director, Lupin Ltd
entered the culture of strictly adhering
Indian pharma machinery manufacturers to contracts. Hence, they provide better
after-sales service and go beyond the
have not only been consistently upgrading
annual maintenance contract (AMC).
themselves but also innovating by investing Moreover, they are flexible in terms
in knowledge. They are increasingly studying of deliveries, contractual terms, etc.
international market trends to learn best-in-class On the other hand, international
practices and bring them to the country. manufacturers do not offer such
support to pharma manufacturers.
An increasing number of international
The Indian pharmaceutical Avers Dr Kamal K Sharma, managing pharmaceutical machine manufacturers
machinery manufacturing sector director, Lupin Ltd, “Indian pharma have recognised India’s achievements
constitutes around 5-7 per cent of the machinery manufacturers have not and evolution in the industry. Indian
global market. In terms of value, more only been consistently upgrading machines are manufactured and used in
machines are being imported today themselves but also innovating by accordance with international standards
than exported, but in terms of quantity, investing in knowledge. They are and do not fear inspection or approval
it is the reverse. Industry experts increasingly studying international of their facility. This is one of the many
believe that this is because imported market trends to learn best-in-class reasons that India has the most FDA-
machines are more than seven to eight practices and bring them to the approved facilities in the world, only
times the value of Indian machines. country. A lot of these manufacturers second to the US.
Indian manufacturers still do not make have successfully made inroads into
machines requiring high technology or foreign soil, and have managed to Beyond Indian shores
laboratory equipment required for R&D. command a sizeable marketshare.” At present, the Indian pharma
Hence, the country still needs to import machinery manufacturing industry is
these machines. Strengths of the industry poised to take the business to next
Looking at the capabilities of According to industry experts, level. The adoption of international
Indian engineering companies, Indian machines are very competitively standards and regulations by the Indian
many international machine priced as compared to machines pharma industry has played a vital role
manufacturers have joined hands from the West and give a good price/ in making machinery manufacturers
with them. This has helped the Indian performance ratio. Besides, the labour capable enough to compete in these
pharmaceutical industry make further in India is economical and hardworking. territories. Indian pharma machinery
advancements in the products and at Due to this, the efficiency output is manufacturers are exploring developed
the same time, supply machinery at a comparatively high in India, thus giving markets like the US and Europe with
price at least one-fourth or one-third the country a price advantage over much interest. Such markets are
of imported machines. other developed nations. defined by standards and criteria that
are definitely higher than the domestic
market. Regardless of such high
benchmarks, Indian pharma machinery
players are eying these markets, as
the profit margins in exports are
considerably higher. In fact Indian
companies are exploring opportunities
in more speculative markets also.
“There are a few who are exploring
opportunities in Afghanistan,Turkey,
Poland, and CIS countries,”explains Kapil
Khandelwal, an independent board
member of various companies. And,
higher profit margins in exports have
boosted innovation or variation among
the operational procedures in India.
40 Modern Pharmaceuticals August 2009

4. COV ER STOR Y
Product requisitions are wide-
ranging and a few leading Indian Kapil Khandelwal
independent board member of various companies
machine manufacturers have now
developed the skill of providing
customised manufacturing and India has an advantage in terms of its offerings
packaging solutions to MNC pharma like its design outsourcing services to
companies. Development in all areas high-end customisation, after-sales support
like infrastructure improvement, R&D,
process outsourcing and validation &
quality upgradation and understanding
of regulatory requirements has been documentation services.
noticed. While up to 2004-05, Germany,
Italy and South Korea were the major
providers of pharma and packaging services,“ states Khandelwal. turn has resulted in increased sales of
machinery products & services, its He further adds, “In the latter aspect, high-quality products from India.
comparatively low-cost products with the Chinese have limited capability. The rise in joint ventures between
assured international quality has now Another area India can tap is the area of foreign and Indian pharmaceutical
also brought the Indian industry to the servicing refurbished equipment in drug companies proves that India can
fore. Several companies in the quality discovery and the pre-production phase, manufacture world-class products
conscious US and European pharma which are dominated by Western players at affordable prices. There are
market have started opting for Indian who have little or no presence in this also significant opportunities
machinery in recent years, according to part of Asia. The SLA-driven service is a for pharmaceutical plant design
industry sources. latent need in the emerging biotech and consultancy and related services,
However, this does not give drug discovery sector. While India and especially for large companies
India a free arena to play around in China have both emerged as leaders in adopting USFDA and UKMCC
the international market. Growing global pharma outsourcing, India offers standards. Overall, being the lowest
competition from Chinese firms, which better product quality, while China has cost producer combined with several
also provides low-cost machinery to more of a cost-reduction advantage.” FDA-approved plants, India promises
the global market, is a challenge faced The implementation of the revised to be a global outsourcing hub for
by the Indian industry. Further, the Schedule M, which insists that the pharmaceutical products.
increased number of players in India quality of manufacturing machines
itself – who negotiate on prices to grab should follow international good Issues within the industry
more customers – is another aspect manufacturing practices (GMPs), has Growth in the advancement and
that companies are facing at present. also supported most Indian pharma upgradation of technology in machinery
However, the quality of Indian products machinery manufacturers. As a result has been fast in India. With almost
are superior to that of Chinese ones of the new norms, Indian pharma low technology offerings in the initial
and the competition within the Indian companies have to ensure quality stage, the Indian pharma machinery
market is healthy for the industry. manufacturing machines, which in industry today is considered as one
Several people harbour the
misconception that Korea and China
are better manufacturing destinations.
However, pharma industry is not
looking for ‘cheap’ machines, but for a
‘value for money’ proposition, which
encompasses many aspects like
reliability, support, upgradability, etc.
“China has a competitive advantage
because of its low-cost mass production
of machinery that has no or virtual after
sales. India has an advantage in terms of
its offerings like its design outsourcing
services to high-end customisation,
after-sales support process outsourcing
and validation & documentation
August 2009 Modern Pharmaceuticals 41

5. COVE R S TOR Y
institutes will help the industry have
Ajit Singh trained personnel and save time, thus
chairman, ACG Worldwide
helping the country as a whole.
There are many small manufacturers whose
quality and reliability are under suspicion. Technology enhancement
They sell at a very low price. Due to this, The pharma manufacturing
industry can work in sync with pharma
overseas customers buy these machines
machinery manufacturers. There is
and are later dissatisfied. This ruins the no demand-supply gap in terms of
reputation of pharmaceutical machinery volumes. Machinery manufacturers
manufacturers from India. are meeting the needs of the industry;
they simply need to keep pace with
that can offer value-added engineering small manufacturers whose quality and the rapidly changing technology
with integration of new technologies. reliability are under suspicion. They sell in the international scene. For this,
The industry is gearing up to meet at a very low price. Due to this, overseas manufacturers will have to invest in R&D
challenges in terms of technology. customers buy these machines and and build their brand. Indian pharma
What it requires is a close partnership are later dissatisfied. This ruins the machinery manufacturers also need to
with the local pharmaceutical players, reputation of pharmaceutical machinery venture into the field of technology
whereby the development will be faster, manufacturers from India.” transfers. The need of the hour is to
say industry experts. Also, at times, the The industry has not attracted forge international marketing tie-ups
industry goes for a tested product from significant international manufacturers so that they can increase their volumes
abroad at double or three times the price to have joint ventures or technology and scale up capacities.
than the equivalent product available transfers. Hence, the industry is Further evolution, in terms of
locally. Hence, the industry requires continuously working on improving technology and investments is required
support in the form of partnerships. the brand image of its products. In the for the machinery sector to truly partner
However, some experts feel that engineering space, the industry has the pharma/life science sector. Indian
the biggest issue in this segment is been able to overcome this perception pharma machinery manufacturers need
that there is very low investment in to some extent. For instance, Pharmalab to upgrade to the latest technologies,
R&D and manufacturers do not work has a tie-up with a Finnish company increase levels of automation and
in tandem with each other. Hence, it is called Elomatic for engineering design. improve documentation.
a fragmented industry comprising Pharmalab gets technical support from
small-scale manufacturers. Elomatic and does the engineering Into the future
Says Ajit Singh, chairman, ACG design in India. This method of working is Against the background of a
Worldwide, “There are many quite inexpensive and profitable. growing economy and exports that
Another issue is the lack of trained have doubled annually during the
manpower. This was not the scenario last two years, pharma machinery
earlier, but nowadays it is a worry. manufacturers are building a new
Salaries have risen and this image. The industry is looking forward
makes it difficult for small- to the continual support of the
scale manufacturers to attract government in terms of exports and in
and afford skilled & trained offering incentives for increasing R&D
manpower. In order to meet investments. The government can also
the specific requirements of play a role in encouraging technology
pharma engineering, experts feel transfers and tie-ups.
the need for exclusive engineering The key to success for machinery
colleges to cater to this subject. manufacturers in the country lies in
According to them, industry needs constant improvement in R&D, quality
institutes to include pharma engineering and effective management skills.
as a subject of expertise. This is because However, the Indian pharma machinery
although many of the areas are in line industry has to further grow through
with the studies of general engineering, integration and unity among the players
a few areas of application in life sciences to grab the maximum potential offered
require expertise. Hence, such training by the international market.
42 Modern Pharmaceuticals August 2009