The future of the Indian laboratory chemicals and equipment industry is promising with the equipment industry already witnessing a major boom and the chemical sector all set to witness robust and double digit growth over the next few years, opine industry observers.
Says Vikas N Shah, Director, International Sales, Loba Chemie Pvt. Ltd. (India), “The future of the Indian laboratory chemicals and semi bulk chemicals is still looking as promising as was a few years ago. More and more of the large players from the international markets which include multinationals like JT Baker, Sigma and MP Bio have entered the market in 2009 – 2010. More than increasing the competition, it will increase the efficiency of the Indian market and products .”
According to SR Sudhakar, Director, sales & marketing , Leonid Chemicals (P) Ltd, Indian lab chemical sector is valued at Rs. 1,000 crore and is growing between 12-18 per cent annually.
“The sector which saw a major fall in business between 2008-09 is now exhibiting modest growth in volume. Prior to 2008, the sector was expanding at a fast pace clocking a growth rate anywhere between 18 and 20 per cent which decelerated because of the global economic meltdown. Unlike the sluggish scene between 2009-10, we are witnessing modest recovery and are expecting robust growth in the lab chemicals space”, says Sudhakar.
The sector has seen an increased presence of multinational companies. There has been a consolidation in the industry and acquisitions. Leading names are Thermo Fischer, Merck Specialties and Rankem, a leading manufacturer & supplier of premium quality laboratory reagents, which was acquired by Avantor Performance Materials, earlier known as Mallinckrodt Baker, he adds.
The country is being most-sought after for its knowledge base. India has an inherent strength in chemistry. The talent pool which are highly qualified are recognized for their dossier presentation capability. This is where regulated markets of Europe and the US are looking for lab chemicals. The growth of the contract research and manufacturing services and clinical research organizations will propel the growth of the sector, says Sudhakar.
There are around 30 companies in the domestic market including Mumbai-based SD Fine Chem in Mumbai and Spectro Chem. Leonid is the only company in Karnataka in the lab chemicals space and is a key supplier to Dr. Reddys, Shasun Chemicals and Micro Labs to name a few.
According to Sunil Punjabi, Director, sales, support & supply chain , Sigma Aldrich, the growth in the lab chemical sector over next few years will be robust and in double digits. Though there will be pricing pressures, growth will offset it. Further, the increasing research spend in life science sector will become the growth engine for lab chemical sector, he adds.
At the same time commenting on the Indian lab equipment industry, Dr. V Satyanarayana, Managing Director, Sipra Labs Ltd says , “there is a major boom in the lab equipment industry in the country and all the companies engaged in the sector are registering 110 and 120 per cent growth. Most of the companies are importing lab equipment from the overseas markets and distributing in India.”
However he pointed out that it would be difficult for the Indian manufacturers to survive in this field as most of the present technologies are registered with the US FDA and the European regulatory agencies and even if the country develops its own technologies, the overseas regulators will be suspicious of it. It may take years to settle in the market.
Though the lab chemicals industry is also witnessing a major growth, the country is mainly depending imports for specialty chemicals as they are not available in the country, he pointed out.
According to Adrian Hanrahan, CEO of Robinson Brothers, one of the UK's largest independent manufacturers of speciality organic chemicals, who is currently doing significant business in India,overall, the Indian market for laboratory chemicals remains strong, with the largest demand for their products coming from the chemical research organisation (CRO) sector.
One of the strengths of the Indian lab chemicals market according to him is the significant number of well- respected, high technology companies operating in the sub-continent which ensures a healthy return for those companies that are willing to make the investment in researching and developing new products to support their activities.
Elaborating on the lab chemicals market scenario,Vikas Shah says “at present the Indian market works with its first priority based on price. I am hopeful that soon the same will change to quality as is the case with users around the globe.”
“India has more than 1000 small re-packers spread all over India with fancy websites to attract international clients as well as Indian customers. These companies do not follow any quality or safety regulations at any level of producing or selling the products. Though they are able to lure customers occasionally on basis of the website and low quotes, they are not able to meet the requirements of the order. This means substandard products, low quality packing, wrong DG Declaration and much more. Such incidents create a negative impact on international buyers who wish to work with India and often organized groups have to pay a price for the same”.
Some of the large groups already established in India for many years are also responsible for the above situation – selling products below the market price to have an upper hand against the competitors. In doing so these companies often bring down the standard of a product, testing and packaging which is a major problem in the industry, Shah points out.
The Government regulation in India also has not paid much attention on packing regulations and transport of DG cargo within India. Due to this, the suppliers mostly are unaware of the regulations and laws in the country of the importer, Shah adds
Many of the shipments are rejected due to proper packing. Many a time the Indian DG Certification is not approved by many shipping lines and airlines. It is often refused by the captain of the vessel who does not have faith in Indian packing, certification or declaration. FedEx or DHL do not accept chemicals directly from customers as they do not trust the documents provided, Shah points out.
According to him skilled labour is still a huge problem in this industry. Employees at all levels should be educated on the dangers of chemical and its handling. Most workers are not provided education and safety gear during while handling such chemicals. This leads to accidents and fear in other workers to take up jobs in this industry. So this sector remains unorganized. These are some of the problems that have to be sorted out for the development of this sector
Some companies such as Hi-Media have done a great job in setting standards and supplying finest quality products around the globe. The entry of such groups would help raise that standards and the quality of products.
“The more organized we are , the more and more we will be able to achieve name , success and recognition in the international market ”, he says.
The Indian laboratory chemicals market is largely controlled by three main pharmaceutical companies in India namely Ranbaxy, E Merck and Glaxo , all of which also have substantial presence in India.
The major end users of laboratory chemicals in India are research institutions like National Chemical Laboratory, Indian Institute of Science etc,government departments like pollution control boards, forensic science laboratories etc, hospitals,industrial quality control laboratories and R&D laboratories and environmental agencies & consultants.