Shashank Sandu, Director, Sandu Pharmaceuticals, elaborates on how Maharashtra has become a favourite destination for pharma cos
India currently represents just $6 billion of the $550 billion global pharma industry but its share is increasing at 10 per cent a year, compared to seven per cent annual growth for the world market overall. Also, while the Indian sector represents just eight per cent of the global industry total by volume, putting it in fourth place worldwide, it accounts for 13 per cent by value, and its drug exports have been growing at 30 per cent annually.
Pharma manufacturing units are largely concentrated in Maharashtra and Gujarat. Both these states account for about 45 per cent of the total number of pharma manufacturing units in India.
Maharashtra has always remained the financial hub of India. Various pharma companies started their manufacturing plants in the state and grew substantially cashing in on the favourable industrial policies offered by the state government. However, among all the industries, the pharma industry might have been the biggest gainer of these policies. Today, almost all the major pharma companies have their headquarters in Mumbai. India has the highest number of US FDA approved plants outside the US, and Maharashtra has the highest number of these plants in India.
Maharashtra is home to around 3,139 pharma units and corporate offices, with major centres in Mumbai, Thane, Tarapur, Nashik, Aurangabad and Pune. The state also leads in vaccine production. Maharashtra contributed 20 per cent to India’s pharma output of $2.66 billion in FY13. The sector received a cumulative FDI inflow of $168 million through 121 projects during August 1991 to March 2012. It has the highest number of pharma units and leading pharma companies
Traditional medicine, including Ayurveda, contributes significantly to the health status of many communities, and is increasingly used within certain communities in developed countries. Traditional medicine has a long history of use in health maintenance and in disease prevention and treatment, particularly for chronic diseases. According to some sources, up to 80 per cent of people in India use some form of traditional medicines, a category which includes Ayurveda.
Ayurvedic medicines are produced by several thousand companies in India, but most of them are quite small, including numerous neighbourhood pharmacies that compound ingredients to make their own remedies. It is estimated that the total value of products from the entire Ayurvedic production in India is around $1 billion. The industry has been dominated by less than a dozen major companies for decades, joined recently by a few others that have followed their lead. Hence, today there are 30 companies earning a million dollars or more per year in business to meet the growing demand for Ayurvedic medicine.
Exports of Ayurvedic medicines have reached a value of $100 million a year (about 10 per cent the value of the entire Ayurvedic industry in India). About 60 per cent of this is crude herbs (to be manufactured into products outside India), about 30 per cent is finished product shipped abroad for direct sales to consumers, and the remaining 10 per cent is partially prepared products to be finished in the foreign countries.
Ayurvedic manufacturing industry is different from the general pharma industry in terms of source of knowledge, nature and process of drug discovery, scientific applications, fragmentation of markets, consumer categories and pricing. It shares similarities with the pharma sector in case of product innovation, marketing strategies, institutional development and networking. Though the turnover from ayurvedic sector constitutes meagre in terms of actual, it also holds two per cent of the global herbal market.
Due to the recent new stringent regulations, the Ayurveda industry, which is still in its infancy, will be discouraged to grow. That is what has been happening since last the last two to three years. Every month or two, there is a new regulation for this nascent industry. The Ayurveda industry is not against any regulations, but bringing in regulations one after the other in quick succession results in a very small window for the industry to operate, as well as upgrade to newer guidelines.
To add to this, rapid decline in the supply of medicinal plants, have caused a major concern to the large Ayurveda industries in the state. The other cause of concern is quality deterioration of medicinal herbs. Procuring right quantity of medicinal plants at right time continues to be a challenge. Medium sized firms believe that the fall in supply of medicinal plants have led to a price rise. This has increased the cost of production, which has eventually led to price rise of drugs. The raw material cost constitutes to be around 40-45 per cent of total product cost. This price increase has to some extent affected the total sales of medium scale firms.
Large-scale transformation of land to non-agricultural activities have led to the fall in supply. Small firms are not able to buy all medicinal plants from the open market, which has has forced them to concentrate in the production of a few most demanded medicines.
The resource depletion has affected all manufacturing units irrespective of the size, but differently. Large units are concerned about the quality of medicinal plants, medium-sized firms are apprehensive about the increased cost of production and finally the small and tiny firms about their survival. However, the government has taken no concrete steps to overcome this issue.
The approach of manufacturing units towards the consumers and attitude of the consumers towards Ayurveda have undergone a thorough transformation over the years. Their acceptance for Ayurveda has grown by leaps and bounds. This has encouraged enthusiastic farmers and agriculturalists to grow many medicinal plants. However, there are no proven agronomic models which can be implemented from lab scale to field scale and this results in large crop failures and distraught framers. The government must step in and create an farmer-friendly ecosystem, linking agricultural colleges, botany departments of science colleges etc, so a sustained supply of raw materials can be assured to the industry.
Modern-day lifestyle demands that Ayurvedic medicines are made available in a much user-friendly form, and this has called for large-scale innovation in the Ayurvedic medicine manufacturing and packing.
Continuous supply of power is the backbone of any industry and plays a vital role in fostering industrial activity. Easy availability of power is one of the important factors for the development of any industry. Electricity is no longer an abundant factor and has turned out to be costly. Shortage of power is regarded as a major problem by 70 per cent of the medium firms. Irregular supply of power creates difficulties because the production process has to work continuously and any breakdown in between affects the entire production.
While there is tremendous scope and huge growth opportunities for Ayurevdic medicines, not only in India but world over, the Ayurvedic industry in Maharashtra requires government support and positive intervention to encash these opportunities.
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