Pharmabiz
 

Indian lab chemicals to grow faster following crisis in US and EU

Nandita Vijay, BengaluruMonday, January 30, 2012, 08:00 Hrs  [IST]

Large Indian lab chemicals players are expected to generate significant growth in the wake of a disintegration signs in the European Union and the pressures in the US.

US which holds 37 per cent of the market share for labs chemicals followed by Europe with 30 per cent and Japan with15 per cent at present are all under pressure due to high cost of R&D.

“Current scene for lab chemicals in the global market is one of gloom. But in India, the scenario is one of hope for more growth. Due to various financial changes in the international market, there is a serious blow on the capex purchases which will reduce the growth of lab chemicals market worldwide,” S R Sudhakar, director - Sales & Marketing, Leonid Chemicals Pvt. Ltd. told Pharmabiz.

“This will shift the focus towards the Asia Pacific region comprising India, China, Thailand, Malaysia and Indonesia which is growing much faster than the western market. By 2014 the market size is expected to change, as we will see a fall in growth. US share will dip to 33 per cent, Europe to 27 percent and Japan to 12 per cent. The fall in growth is coming out of significant growth in the Asia Pacific where from a mere 11 per cent it will register 20 per cent growth which is an increase of 9 per cent  by 2014,” he added.

Specific to Indian market, recent investment flows into pharma R&D segment, CRAMS, CRO is helping markets to grow in double digits for the next two to three years. Apart from this, government of India has announced a substantial allocation of spending in research for the next 5 years. This will help Indian market to grow faster compared to the west.

At present, most of the major lab chemicals companies are depending on third party manufacturers in India. Few of the manufacturers are already having good facility and another one or two companies are likely to join the bandwagon by setting up manufacturing facilities in the country in the reagent segment. Regarding microbiological reagents, very few manufacturers are there and at present India can produce world class quality products at very competitive cost. This is helping Indian companies to expand fast in the West and also consolidate  their position in Indian market by restricting multinational companies (MNCs) in this segment.

As far as bio-reagents are concerned, India is far behind in terms of development and the required technology. In this segment, global companies  continue to dominate and take the premium much more than they deserve, he said.

Key challenges for Indian lab chemicals industry is that with the presence of global companies, big players are restricting the growth of smaller players in India. Some of the Indian companies have opted to be third party manufacturers for the global players. On the regulatory front, huge investments are required by the Indian companies. Earlier this was worth it  as realizations were better as margins were high. Now due to stiff competition, companies are reluctant to invest because the  investments in the production of lab chemicals is no longer viewed as lucrative, stated Sudhakar.

 
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