In the next five years, world pharmaceutical market alone is poised grow at a rate of 8 percent with business opportunity of over a US$ trillion. Countries like USA, Japan and those of Europe led by Germany shall remain dominant market controlling over 80 percent trade opportunities. Asian countries like South Korea, Taiwan and India are expected to have growth rates ranging from 12 to 15 percent annually.

Since 1971, multinational companies' (MNC) share of Indian domestic market has shrunk to 35 percent while domestic companies have increased their share to 65 percent progressively. India's export market is growing at the rate of 23 per cent. Though the Indian companies control 8 percent of global volume (4th by world ranking), but it is merely 1 percent by value terms.

Hence it is imperative for the Indian companies to invest on infrastructure in high-end manufacturing facilities and R&D facilities in order to achieve the projected US$25 billion sales in 2010. It is observed that 40 per cent of cost of a project goes to machinery and out of this 70 per cent is on imported machinery component from Korea, Germany and Italy in order to meet the global standard manufacturing capability and practices.

With as many as 80 companies successfully securing US FDA approvals, (though few companies only converted them to opportunities) the new height to be scaled is oncology/steroids/hormone products and lyophilised products. The volumes may be less but with high value.

The challenges to be met to set-up manufacturing facilities to meet the demands of Isolator and containment techniques, C-rabs and evaluating the OEL ( occupational exposure levels) would be critical to produce the drug safely.

For pharma compounds that undergo hydraulic degradation, lyophilisation offers a means of improving their shelf life and stability. Lyophilisation typically allows to preserve biological activity of a product. It eliminates the need of refrigerated storage and reduces the product weight to lower the shipping cost. Further it also produces a dry product that reconstitutes readily.

The solution for these challenges clearly is from manufacturers from Korea, Germany, and Italy and in some cases from UK and USA only. Many Indian companies have invested heavily in such technologies which meet the validation, repeatability and consistent end product quality needs of regulated market.

Machinery market

Imported pharma machine market is estimated to be valued at Rs.350 crore and is expected to double going by the visible market trends for sophisticated automated systems in the formulation drug production. This market is expected to grow at 30 percent going by the demand. Whereas the indigenous pharma machinery market (both organized and unorganized) is valued at Rs.700 crore and will consolidate its presence.

The import machinery market has further received a spurt because of the favorable government of India policies like simplified procedures, simpler and easier EPCG benefits announced in March 2006 Union Budget where a 5 percent customs duty is levied as against 15 percent levy and the payment of duty saved is over a period of 7 years with holiday period for the1st year.

Indian companies look out for machines from Korea,Germany and Italy owing to the fact that imported machines have faster return on investment ( by better yields, saving in utilities) and lower manufacturing costs and cost per unit is very less.

Companies will have to allocate investments ranging from of Rs.10 crore to 30crores alone for the machinery based on the production capacities. European and Korean machineries are more dependable but expensive and in terms of validation these outclass those from China.

(The author is senior manager - Marketing,Parle Tools International)