The lab equipment and chemical industry in India is in the cusp of a transition. The sector is witnessing a phase of quick transition along with growth as industry, particularly, pharma, biotech and R&D labs are replacing old equipment and chemical processes with new, advanced and sophisticated analytical instruments.
Aided by the booming growth of sectors like pharmaceuticals, biotechnology, clinical research, diagnostics, hospitals and academic institutions, the laboratory analytical equipment market in India has been growing leaps and bounds in the past few years. The trend of installing new and replacing old has helped the lab equipment industry to grow at a rate of 20-25 per cent per annum during 2012-13.
Moreover, Indian laboratory equipment and chemical segment which was originally purely import dependent is now fast becoming indigenous and self reliant. Today, except for a few multinational pharma and biotech companies, almost 90 per cent of research and development labs, clinical research organizations and academic institutions in the country are sourcing their laboratory equipment from domestic manufacturers.
“The Indian pharmaceutical and biotechnology industry is in a transition stage and with more new expansions, joint ventures and new entrepreneurs coming up in the pharma industries; India has huge potential for growth in the coming days. Of late many local companies are venturing into research and development and coming up with custom- based lab equipment for the industry,” said S S Muthukrishnan, Assistant Manager from Berthold Technologies.
Exhibiting India’s laboratory equipment might and its strength of indigenous manufacturing of most sophisticated world class lab equipment, IndiaLabExpo-2013’ was held in Hyderabad during November last year. The 5th international exhibition and conference not only showcased the laboratory equipment for pharma, biotech, medical, chemical and other R&D segments of life sciences but had also deliberated on emerging trends in lab technology for the pharma and biotechnology industry.
Being a perfect platform for the domestic and international customers, IndiaLabExpo exhibited different kinds of laboratory, analytical and biotechnology instruments for the industry. About 300 lab equipment manufacturing companies and distributors from across the globe participated in the event.
Apart from Indian laboratory equipment manufacturers, about 50 foreign companies from China, USA, South Korea, Japan, Germany, UK, Hungary, Switzerland, Canada, Russia, Italy, Switzerland, Taiwan, Sweden, Netherlands etc took part in the exhibition.
Showcasing the latest trends and technology in various fields related to pharmaceutical and biotechnology industry, participants exhibited laboratory and analytical instrumentation, chromatography and spectroscopy, biotechnology and life sciences, process control and reactors, medical and clinical diagnostics, clean room and sterilization, quality control and environmental, educational labs, measurement and testing, liquid handling and filtration, laboratory consumables and allied products, laboratory furniture and construction material at the exhibition.
Laboratory equipment manufacturers like QA Tech, Berthold Technologies, Pacific Tools, PacMac Solutions, Thermao Control systems, Omega Scientific Instruments, Crescent Scientific, Wipro GE Healthcare, Dyna Filters, and Analab etc., exhibited their products.
Commenting on the present prospects of growth of laboratory equipment industry in India, Meghdoot Thakkar, from PacMac Solutions said, “Indian laboratory industry has enough stuff to grow; many local Pharma companies are sourcing their equipments from local vendors and not depending on imports. Only a few big companies are importing some specific high end equipment from other countries.”
While Andhra Pradesh holds a large chunk of private pharma and biotech companies, Hyderabad is regarded as a hub for National institutions like National Institute of Nutrition (NIN), Indian Institute of Chemical Technology (IICT), Center for Cellular and Micro Biology (CCMB) and leading pharmaceutical institutions like NIPER and other academic institutions and Universities which have all instituted most sophisticated research laboratories with most advanced laboratory equipment for conducting research experiments in the fields of food and nutrition, chemistry, pharmacy and biotechnology.
“The laboratory equipment industry in Andhra Pradesh has witnessed an overall growth of 19 per cent in the year 2013. This is particularly possible because of governments support for research and development and encouraging new investors in the areas of pharma, biotech and educational sectors,” said a spokes person from SD Corporation.
Growth prospects
As the state and central governments in India have allowed more foreign disinvestment (FDI) and encouraging more investor friendly industry environment, the coming days may witness more growth for the lab equipment and chemicals segment in the country. As has been witnessed during 2012-13, the growth was projected at 20-25 per cent per annum. It may even touch and cross 30 per cent in the next five years.
As predicted earlier the lab chemicals markets in the country is all set to add another Rs.250 crores to its earlier value of Rs. 1000 crores, topping Rs. 1250 crores in the year ahead , according to industry experts.
Particularly the burgeoning pharmaceutical sector has been the major factor for the growth of lab equipment and lab chemicals markets in the country. During the past few years, India has emerged as the favoured destination for global pharma giants lured by the dual benefits of a combination of skilled labour and low costs. This has led to a boom in contract research and contract manufacturing opportunities.
"As many drugs approach the stage of patent expiry, there is the constant need for the R&D of newer drugs to fill the void and India has become the hotbed for an entire gamut of outsourced activities, ranging from drug discovery to clinical trials. The high demand for laboratory analytical instruments in the booming pharmaceutical space will have a positive impact in the Indian laboratory analytical instruments market,” say industry analysts.
Assured of growth prospects, foreign suppliers of analytical instruments are bolstering investments in India and establishing their foothold here by setting up/expanding their own branches instead of relying on distributors. From the suppliers’ viewpoint, distributors support a wide range of products, making it impossible for them to devote attention on any particular product. Setting up their own sales and support offices in India will further suppliers’ interests, as it allows them to target customers with more focused marketing and sales initiatives.
In order to push the growth of R&D in the country, the successive governments in India have streamlined the regulations, gave favourable support to encourage the shift of drug discovery research to India. Large funds are being allocated for R&D activities in various streams, including chemistry and physics, aiding the demand for laboratory analytical equipment.
As both chromatograph and spectrophotometers are crucial for drug discovery research, growth in this segment will have a ripple effect, enhancing prospects for the laboratory analytical instruments market.
Further, the food and beverages market has contributed to the growth of this sector as the export of processed foods require adherence to stringent standards stipulated by importing nations. Molecular analysis equipment is a vital component of the necessary infrastructure used to analyse the quality of exports and verify their conformance to foreign regulations.
“Along with industrial progression, concerns over water safety and waste water treatment are acquiring larger significance. Heightened emphasis on ensuring the purity of consumable water and proper water treatment facilities has boded well for the ion chromatography (IC) market. More stringent governmental regulations are in the pipeline, increasing the demand for IC instruments. In a wider spectrum, concerns such as the preservation of the environment and environmental security are calling for attention, triggering efforts directed toward resolving these sensitive issues. As separation equipment such as IC play a significant role in these functions, their demand is expected to increase further, pushing market operations into high gear," points out industry analysts over regulatory issues and environmental concerns.
Emerging Technologies that are fast replacing the old processes in the research laboratory include Gas chromatography, Liquid chromatography, Ion chromatography, Infra-red (IR) spectrophotometer, Ultraviolet (UV) visible spectrophotometer, Gas chromatography-mass spectrometry (GC-MS), Liquid chromatography-mass spectrometry (LC-MS).
India’s chemical markets
India's market for chemicals is estimated at US $ 35 billion. Owing to the increasing wealth of the Indian population and accumulated needs, analysts expect further growth in the future, a new market report by Germany Trade and Invest says.
According to German Trade and Invest survey report, India's chemical industry, although on a back foot compared to the European or American industry leaders, is still on a growth curve. The country is estimated to be the world's 12th largest producers of chemicals and expected to profit from its emerging economy and consumer demand. The IIP index of industrial production for chemicals rose by 2.3 per cent within the last year.
An even higher growth is expected for the current year, mostly driven by a post-crisis rise in market demand of automotive supplies, building and construction and consumer goods.
The Ministry of Chemicals and Fertilizers estimates the country's chemicals market at US $ 35 billion (US $ 20 billion of which are the market for basic chemicals while the speciality chemicals market is rate with US $ 9 billion). The Indian Chemical Council has even projected the Indian chemical markets to reach a total US $ 68 billion market (basic chemicals US $ 33 billion, speciality chemicals US $ 17 billion). Both still expect a big potential for growth in the Indian chemicals market.
Pharma to drive chemicals market
The demand for pharmaceuticals is going to be the major driving force for the growth of Indian chemical markets. Pesticides as well as colours and paints also showed an exceptional market performance. The Indian annual market for pharmaceuticals was estimated with Rs 563.7 billion (US $ 12.8 billion) for 2009/2010 by the Centre for Monitoring Indian Economy. Pesticides went up by eight per cent to Rs 136.9 billion (about US $ 3 billion), about the same size as the market volume of colours and paints. Also fertilizers showed a solid growth within the last year, a development that is further stimulated by the governmental subsidies programme NBS.
Most basic chemicals showed a significant drop in market volume. Only Benzol though a comparatively small market segment, showed a good growth value. Especially synthetic resins (- 6 per cent) and caustic soda (- 21.6 per cent) performed poorly. The market for Urea, soaps and cleaning agents remained more or less stable. Analysts predict strong growth rates, driven by a growing domestic demand.
The Indian market for pharmaceuticals is expected to grow by an average rate of roughly 20 per cent per year up to US $ 74 billion in 2020. Experts feel that increasing prosperity will also sharpen the Indian population's interest in strong trademarks. Drugs against diabetes and gastric ulcer are expected to show highest growth rate on the Indian market. Since the Indian average expenditure for personal hygiene products is about US $ 3.4 per year, analysts expect a big growth potential for cosmetics in the near future.