With the rising global economy and increasing spend on healthcare globally, the pharmaceutical manufacturing industry is to stay evergreen, so does, its ancillaries like machinery and packaging. At present the Indian pharma machinery and packing industry is growing at 14-15 per cent. It will continue to thrive in future provided it adopts, innovative, indigenous and custom based trends according to the changing times, opine industry experts.
According to Debasish Roy, Managing Director of The United Engineering Company (UEC), the Indian pharmaceutical machinery industry during the past five decades has been evolving and upgrading itself with indigenous technology to serve the domestic and international requirements.
From the early 60’s, Indian pharma machinery manufacturers started substituting imports by indigenous machinery. At the same time the Indian players have also become capable of competing with western players and also could meet domestic demand by supplying quality low cost machines.
Packaging which plays a key role in the overall drugs and pharmaceutical market in India is growing steadily with the same pace of the industry. Pharmaceutical packaging consists of various types of glass, PET bottles, strip and blister packs, injectables, ampoules, bulk packs etc.
The Indian pharmaceutical packaging industry is witnessing a spurt in growth. Today, the packaging industry in India is considered a sunrise industry and its linkages are extensive and highly employment intensive. It involves manufacture (and sometimes import) of a wide range of packing material - paper, paperboard, cardboard, a range of polymer products including rigid and flexible packaging material, aluminium foil, tin and good old wood and steel.
Other backward linkages of packaging include printing, labelling and binding/adhesive tapes etc. Machinery for making/processing these products and for packing/packaging is another segment closely linked to this industry.
Growth will follow an upward trend in global medication consumption, which will expand at a strong pace as ageing demographic patterns lead to an increasing number of diseases and disorders. Pharmaceuticals will assume an expanding role in worldwide health care delivery- based on new product introductions and economic advantages over other forms of patient treatment.
Besides upward trends in medication consumption, the adoption of stricter regulations and standards governing the production, storage, distribution and labelling of pharmaceuticals will boost global growth opportunities for packaging products and accessories. Historically, pharmaceutical packaging requirements have been focused exclusively on preserving the quality of enclosed medication. These requirements are now being extended to cover aspects such as the prevention of product tampering and counterfeiting, the assurance of product dispensing accuracy and the promotion of patient compliance with product dosage schedules.
Market trends in India
Currently the Indian packaging industry market trends indicate a growth of 14-15 per cent annually. “As the pharmaceutical industry is poised to growth further with government’s initiatives, the pharma packaging and machinery industry will also reflect the growth,” said Dr. P.V. Appaji, Director General of Pharmexcil.
Though the industry indices indicate a slowdown at present, with the new boost from government, this growth rate is expected to double in the next two years. According to the Indian Packaging Institute, Indian packaging industry is US$14 billion and growing more than 15 per cent per annum. These figures indicate a change in the industrial and consumer set up.
The growth in the packaging industry in India is mainly driven by the food and the pharmaceutical packaging sectors. The large and growing Indian middle class, along with the growth in organized retailing in the country are fueling growth in the packaging industry. Another factor, which has provided substantial stimulus to the packaging machinery industry, is the rapid growth of exports, which requires superior packaging standards for the international market. With this the need for adopting better packaging methods, materials and machinery to ensure quality has become very important for Indian businesses.
The Indian packaging industry is dominated by plastic flexible packaging. The traditional rigid packaging users have also been seen to shift to flexible packaging in recent times. According to industry sources, the main reasons for this are that flexible packages are found aesthetically attractive, cost-effective and sturdy. Consumer preference for the use of convenient packaging and packaged products in affordable quantities in laminates is also one of the main reasons that have contributed to the growth of flexible packaging in India. The food-processing sector is the largest user of flexible packaging, accounting for more than 50 per cent of the total demand. The flexible packaging segment is estimated to be growing at over 35 per cent annually. Major players in the flexible packaging sector are Paper Products Ltd and Flex Industries.
The packaging industry in India is a mix of both organized medium to large players as well as very small players with a localized presence. The industry is comprised of a large number of manufacturers of basic materials, converted packages, machinery and ancillary materials. Domestic demand for packaging is anticipated to grow rapidly within the next five years. Recognizing this trend, the industry is gearing itself to adopt scientific and functional packaging.
According to industry experts, three specific segments can be identified for opportunities in packaging equipment in the Indian market. The unorganized sector represents the larger opportunity, given the increasing quality-consciousness of end customers. The cost of equipment and upgradation holds the key to success in this segment. Large companies, primarily the multinational corporations (MNCs), which comprise the other segment, would be guided for the choice of such equipment by the global policies and standardization of their parent company.
The organized segment, which caters to the major food and pharma companies are conscious about quality and the ability to produce various packaging products, thereby enabling them to address a larger market.
As per the latest market data available, the Indian market for packaging equipment is characterized by a few large manufacturers with a nationwide presence along with a large number of small players in the unorganized sector with a regional presence.
Laminated products including form-fill-seal pouches, laminated tubes and tetra packs are growing at around 30 per cent per annum. There are about 600-700 packaging machinery manufacturers, 95 per cent of which are in the small and medium sector located all over India. Germany and Italy are the latest suppliers of packaging machinery to India but the focus is now shifting to Taiwan, Korea and China.
While Indian packaging machinery exports are rapidly growing, imports are estimated at US$ 125 million. India's per capita packaging consumption is less than US$15 against worldwide average of nearly US$100.
The large growing middle class, liberalization and organized retail sector are the catalysts to growth in packaging. Food and pharma packaging is the key driving segments.
Industry sources indicate that, although substrates like plastic have gained vast acceptability, attractiveness of paper and paperboard consumption remains. Currently, India is ranked 15th in the world for its paper and paperboard consumption and is expected to improve its rank in the future.
Paper is the fastest growing substrate segment with a growth rate of 6-7 per cent. The total demand for paper currently is estimated to be around six million tonnes, of which about 40 per cent is consumed by the packaging industry. If the demand for paper continues to grow at the same rate, total paper consumption is expected to reach 9.5 million tonnes by 2010.
With Make in India initiative by the government, India is keenly looking to attract more investors to put funds for manufacturing in India. Increasing investments by both domestic and foreign companies in the Indian food processing sector, especially in beverages, dairy products, processed food, edible oil, and marine products have expanded the market for packaging machinery. The food processing industry has contributed in a major way to the growth of the packaging industry.
According to the Indian Institute of Packaging (IIP), only two per cent of India’s total processed food is packaged compared with 70 per cent in western countries. Hence the packaging and machinery industry in India have vast opportunities to explore and can become not only self sufficient, but can also serve larger sections of the global society by continuously treading the path of innovation, indigenousness and custom-based trends.