The Small and Medium scale Entrepreneurs in India are more in a transition mode, with high prospects based on the true stories of Indian small scale companies evolving up as large scale pharma companies and entering themselves into the big leagues in the global pharma scenario.
The majority of the pharma companies out of around 10,000 active pharmaceutical manufacturers in the country are coming under the group of enthusiastic SMEs. The success story of many of the major companies like Cadila, Cipla, Unichem and Ranbaxy were in the same league in the fifties, when the size of pharmaceutical production in the country was Rs One crore. The industry, with its gradual evolution has reached up to around Rs 40,000 crore size within the past forty seven years, which accelerates the momentum of the SMEs in India. There are a number of small pharma companies making to the top, thus inspiring the current SMEs.
From the beginning itself, the expertise and efforts for the betterment of the industry acted as a major growth factor, as the majorities of the SME entrepreneurs of pharma companies were either pharmacy graduates or marketing professionals. One of the major hindrance in the evolution of the small and medium size companies were the lacunae of financial assistance to support the manpower and intellectual efforts.
Here, in the financial matters also, we can find a tremendous change, where the banks are ready to offer adequate finance to grab the market opportunities, when enough documents are furnished. Thus, finding funds for the betterment of business is not as a nightmare as it was considered in early years.
Opportunities
With the development of information technology and related business boom, the accessibility of even the minuscule of information has been increased. The SMEs in the country are much more informed over the minute details required for their growth through the information boom. The right kind of information on the emerging opportunities, which can be very much utilized with proper planning, and the increased accessibility towards more variety of business models has widened the arena of the industrialists currently.
The large-scale companies have already found their way to explore the developments for their growth in global perspective. Giving enough importance to manufacturing, ensuring quality and cost effectiveness and implementing enough pressure in R&D activities makes these companies thrive to the top of the industry, not only in domestic market, but also in the global scenario. Though many of the SMEs are also on the path of evolution through selecting their choices at right time, another considerable number of SMEs has to be rightly informed about the existing opportunities and emerging strategic tools to strive, so as to accelerate their growth towards the big leagues.
In a state of maturing
It is evident from the current industrial scenario that the SMEs in the country is in a maturing stage, after striving through lots of adverse situations. With its strength attained through its struggles to the adverse issues, it is time for them to explore the abundant market potential in the country by using right opportunities.
As mentioned, the Indian pharma SMEs has been struggling to various regulatory and industrial issues in the past years. The section of medium scale pharma companies was much worried about the patent issues. Later, these companies realized that almost 85 percent of the products range in the country are out of patent, and there is little to worry on sailing through these products, while the big companies strive towards more patented products.
Even though some issues related to maximum retail price (MRP) based excise duty regime, the industry has passed through many of the hurdles and the time is to take off to rapid growth, as the worse conditions in the field is almost over. It is in this context, an organization like Indian Drug Manufacturers' Association (IDMA) focuses to play a considerable role to spread awareness among the SMEs on the existing opportunities.
IDMA lits the torch towards the importance of marketing and co-marketing strategies for the SMEs to manage the field force and advices companies to focus on the niche therapeutic areas to develop products or to concentrate on regional marketing, in which the firms can better implement their expertise and grow as unique in the market. The other options put forward by the association for the SMEs is to explore the export opportunities in the less regulated markets or to focus on catering needs of institutional business, keeping contract manufacturing or outsourcing marketing activities as the last options in growth strategy. Some SMEs has already commenced exploring niche area of OTC markets using the information and communication potential available in its environment.
The conditions evolved in the Indian pharma have also opened a wide opportunity for the SMEs in the international market. Thanks to the great infrastructure and expertise available in India, as the overseas buyers feel that the companies in India can offer quality products in a lower price. The country can offer a wide area of services to the oversease market including sizable quantity of pharma supplies in lower cost due to the lower cost and increasing domestic competition among the growing industry.
India, with its long history in formulation business and related facilities, have better future in formulation business in the global pharma industry. It is interesting to note that while China leads ahead in API business where again India records rapid growth, the formulations business in India has outstripped the bulk drug business in India, promising a better future for the sector, as the formulation technology and manufacturing facilities has developed year after year.
The continuous efforts of the Indian companies to develop formulation sector in the previous decades is backed with stability of products and market research. The SMEs have a major role to play in the generic formulation field in the global scenario, a still-evolving sector in pharma industry. For this, the SMEs cater to the markets other than US and Europe, like South East Asia, Africa, South and Central America and the Commonwealth of Independent States (CIS) region.
The increasing expertise potential emerging from the pharmacy colleges in the country, the SMEs are well organized with more number of technicians on pharmaceutical science, R&D and biotechnology. Thus the finance, manpower and expertise, logistics, travel and communication and information gathering are ready to serve the small players to evolve in a big way. These companies can also offer technical contract service on R&D required by MNCs and large-scale manufacturers on bio-equivalent studies for ANDA dossiers, as the SMEs are already equipped for these studies that some of the African countries have started including recently.
The IDMA has been advising the SMEs through its seminars to concentrate on niche therapeutic areas, which will also help them in marketing and exports and even contract manufacturing and research. In order to attain this momentum, where every company in the country grows to the big league with selected strategies, the SMEs should understand their merits and demerits through unity and co-ordination.
According to Atal Bihari Vajpayee, the former Prime Minister of India, the SMEs in Japan contribute around 52 percent of their total exports and the SMEs in USA, contribute almost 54 percent of the total domestic sales in USA. The SMEs in India can take inspiration from them and surge ahead.
(The author is chairman-SME Committee and also vice-president of Indian Drug Manufacturers' Association.)