A Growth Saga

Ajit Singh, Chairman, ACG Worldwide, speaks on the journey traversed by the Indian pharma industry and predicts a bright future for it in the times to come

The amazing growth, sophistication and international reach of the Indian pharma industry in the last few decades has few parallels. It is now promoted as the ‘Pharmacy to the World’. I prefer to use the words ‘World’s Pharma Hub’ which would be more correct, also in its grammar.

Our group, ACG Worldwide (formerly, the Associated Capsules Group), started its production of empty capsules in the 1960s, along many of the present leading companies of the Indian pharma industry. We grew side-by-side with the Indian pharma industry.

Let me illustrate the performance of this industry based on ACG’s actual experience as a leading supplier of equipment and consumables. By the second year of our production by when the output had reasonably stabilised, we were producing about 50 million capsules per year. We are now producing about a 100 billion capsules a year. This exponential growth is an indication of the growth of the pharma industry in India.

As the World’s Pharma Hub, India makes thousands of formulations to meet all illnesses and doctors’ prescriptions.

Some people say that, in spite of its other advancements, India has been largely unable to develop any new pharma molecules that have become blockbusters. This may be so, but should India’s strategy be any different from what it is.

The Government of India has played a strong supportive role even as it burdened the industry with a number of controls. For example, in an almost uncanny fashion it gave protection to the industry when it was most needed. And left them to compete with the rest of the world at the appropriate time, when it was felt to be strong enough. Pharmexcil, the export promotion council has also played an important role in assisting the globalisation of this industry, particularly in the last few years.

India has developed the capacity to manufacture huge quantities of formulations, of world quality standard, at the world’s cheapest prices and it still makes a profit. This is itself an indication of high technology and competence, surely more important than inventing a couple of new molecules. No other country in the world has been able to match this performance, and India’s leadership increases year-by-year.

Though the IT industry has received greater recognition and its size is much bigger, the pharma industry should really be recognised as the pride of India. It’s a high-tech, high value-added industry not relying on cheap labour, and operating with ingenuity and high productivity. Due to its affordable prices, the industry saves millions of lives globally each year.

One of the noteworthy aspects of the Indian pharma industry is that many of the largest companies in India are headed by pharmacists or technocrats. This is not so in advanced countries where large companies are generally headed with persons from Finance or Marketing or similar backgrounds.

The resilience of this industry in India is demonstrated by its success and growth even though it has the strictest price controls in the world. Like a champion weight-lifter challenged with heavier and heavier weights, every successive round of price control the industry has not succumbed, but has only strengthened. And, interestingly, several heads of pharma companies are among the richest in the country.

Alongside, Indian pharma, its ancillary industry has also developed the capabilities, the technology and competence to compete globally.

For example, in the sophisticated, high technology gelatin capsule industry, ACG is the second largest in the world and growing much faster than others.

Several types of pharma machines designed and made in India lead the world in volume of production and in the value-for-money they offer to pharma customers worldwide. Major global pharma producers and even MNCs, recognising the strong competition they face from Indian pharma manufacturers, have started importing and using Indian-made machinery and ancillaries, as historically done by Indian competitors, so that their costs become more competitive.

At the present time, various units of the Indian pharma industry are facing rough weather with inspection of their plants by some overseas FDA agencies. Somewhat damaging is the focussed attention such supposed shortcomings get in the global media. If one looks at the websites of some of the overseas FDAs, the strictures on the pharma companies in their own countries are equally onerous, often to the extent of recalls of pharma products.  However, they do not receive the same publicity.

In my opinion, this situation will not last for long. The indian pharma industry is rapidly complying with the requirements of overseas inspection agencies. The issue largely concerns to documentation and accuracy of recordings.

Retraining, and an attitude of compliance needs increased focus all the way down the line.  And the lower you go, the more difficult and time consuming it can become.

Perhaps a quicker solution would be to install more automation. This is also necessary for further advancements in the pharma industry.

Where Indian exports to advanced countries have been temporarily affected, those countries will have to obtain their medicines from elsewhere, or manufacture locally. The costs will be much higher, with a drain on their national budgets, as prices of most medicines in many countries are borne by the governments themselves. As it is the cost of the medicines for their employees is so high that, in industries such as the automobile industry, the cost of medicines for their employees is higher than the cost of steel they purchase. It is likely that for the supply of medicines, the
advanced countries will soon have to revert to India

The Indian pharma industry, however, should not rest on it’s past success. Other countries such as China who dominate the world’s supply of bulk drugs, are anxious to replace India as the global supplier of formulations. The Indian pharma industry should respond, and it is responding, by getting into more sophisticated formulations and dosage forms, as for example, by producing and exporting ‘super generics’. These have vast potential and superior margins.

With its large reserves of well-trained pharmacists and technocrats, many of which migrate into the pharma industry, India is in a unique position to move up the value chain.

To accelerate this process many leading pharma companies are working closely with their suppliers of equipment and consumables like capsules.

As an observer of the world pharma industry for decades. I am very hopeful for the future.

We need to salute the leaders, the professionals and the workmen of Indian pharma industry for planting the flag of India through exports to over a hundred countries. And much of the world market is still available.