Business of pharma machines and packages in India is now moving fast on the upside, thanks to the country's pharma industry which continues a double-digit growth saga, despite the present slowdown in all major markets.
Estimates suggest that the Indian pharma industry would further witness a CAGR of 16% between 2007 and 2011. With an annual turnover of Rs 1,500 crore and growing at over 10% per annum Indian pharmaceutical machinery manufacturing sector constitutes around 5% of the global market in value terms. The rise in joint ventures between foreign and Indian pharma companies proves that India can make world-class products at affordable prices.
Presently the country's pharma machinery industry caters to the segments of tableting, capsulation, powder processing, material handling, research and development (R&D) equipment and instrumentation, coating and bulk drug plant installation.
There are over 400 organised machinery makers in India. Majority of these players undertake job works for third parties and supply custom made machineries to foreign players.
Amongst the machineries, there is a widespread demand for packaging technologies such as horizontal and vertical form-fill-seal machines for solids, granules and liquids. Besides, the demand for blister packing and cartooning machines, form-fill-seal machines for flat, top and bottom models, bag-in-box systems, sterilisation and filling technologies for vials and ampoules and filling and sealing of metal containers are also on rise in India, reports indicate.
Despite the reported increase in demand for various technologies, the Indian pharma machinery manufacturing industry failed to catch up with the pace in 2007 that the industry has been registering the previous years. "Compared to 2005-06 and 2006-07, Indian pharma machinery manufacturing industry didn't fare well in 2007-08, as most of the companies were into expanding their business reach to excise free zones in Uttaranchal and Buddi to avail sops. Besides, most of the players were seen relaxed as the government extended the relaxation from March 10, 2007 to March 10, 2010, and were waiting for more relaxation from the Union budget 2008-09. Hence the industry didn't witness much of manufacturing activities," said, Anil Shukla of Cadmach.
Revealing that most of the pharma machinery manufacturers at excise free zones were taking up manufacturing projects from third parties in 2007, he said, "Almost 60 per cent of the works were carried out for third parties and hence the companies could not benefit from the sops offered by the government, as they were extended only to in-house activities. This also has impacted the sluggish performance of pharma machinery manufacturing industry in 2007."
However, the machinery manufacturers look at the future of the industry with great optimism. Because they know full well that all they have to do is to exploit the potential by providing necessary machinery ensuring proper design, ease of user application, simple maintenance and also validation protocol for the new equipment that are essential for the pharmaceutical companies.
When it comes to packaging, it looks all prepared to grab a bigger share in the overtly growing India pharma industry. Currently, the pharmaceutical packaging occupies more or less 10 to 15 per cent of the overall pharma market in India. Among all pharmaceutical packaging, blister packaging is considered as the growth driver with a 60 per cent share of primary packaging market. Factors such as broad adaptability to unit dose, clinical trial compliance, institutional, over-the-counter and sterile drugs work in advantage of blister packs.
A wide range of services, including packaging of solid, oral, ethical and over-the-counter drugs, pharmaceutical pouches and strip packs, medication tubes, prefillable syringes and prefillable inhalers are offered by Indian packaging firms. All these sections are getting well-off except the market for glass pharmaceutical bottles and jars as much of their applications are lost to blister packs and high barrier plastic bottles.
According to the Freedonia Group, a market research organisation, the demand for pharmaceutical packaging would grow by nearly 10 per cent annually for the next three years, with rigid packaging, thermoformed trays and blister packages showing particularly high growth. Flexible packaging, for which the medical and pharmaceutical industries already make up around 7 per cent of global demand, is also tipped to be a growing market.
Not only in the domestic front, but also in the export front Indian packaging industry has made lucrative gains over the past years. In 2007 alone, this allied sector succeeded in garnering attractive revenue from export business. Though exact figures are not available at present, a spokesperson of Bilcare, said, "The growth in the past year with respect to export business has been very fruitful. We envisage that export growth from Indian pharma is only going to grow from here and with it the packaging will also follow the same trend." He also disclosed that the growth of packaging industry is very much depended on the pharma industry and given the growth rate of the country's pharma industry, packaging industry had a modest growth in 2007.
Referring to the response of international pharma community to services offered by Indian pharma packaging industry, the Bilcare spokesperson said, "The response of international pharma companies to services offered by Indian players is very good. As a result, global pharma companies are looking at Indian companies as their sourcing partners, provided it matches with their standards."
The packaging industry has also benefited from the outsourcing trend that has almost become the order of the day in the pharma industry. "Outsourcing is the name of the game and packaging industry has also seen such trends more particularly in the area of clinical packaging, stability studies, optimum packaging, research study and other related areas," he added.
Despite some great stride in the domestic front, pharma packaging industry in the country remains highly fragmented, as most of the players are either regional or country specific. Hence it accounts for only a very few global players. There is no major merger and acquisition activity that has happened in this space recently.
Since quality and innovation are the two most important aspects in packaging, it is important for the Indian players to prove their strengths in it to attract more business deals. Also, they have to match global standards of European Pharmacopia or US Pharmacopia and stick to current good manufacturing practices (cGMP) standard and procedures to earn a name in the global front.