ACG, with more than five decades of experience in making empty hard capsule shells for pharmaceutical customers, is constantly focusing on quality, reliability and service that has enabled its aggressive global reach to emerge as a leader in the business. The company has diversified its portfolio to vegetarian material like HPMC capsules. ACG has been consolidating its market leadership in India and also quickly expanding the global footprint. Selwyn Noronha – CEO, ACG Associated Capsules Pvt Ltd, speaks to Laxmi Yadav, Pharmabiz, Mumbai about company's growth story in empty capsules market in India and abroad over the years as well as innovation taking place at the company: Excerpts

ACG ACPL is one of the largest producers among pharmaceutical grade hard gelatine capsule manufacturers in the world. Can you brief about the challenges faced by the company in becoming major producer of hard gelatine capsules?
The pharmaceutical sector is a highly regulated sector and demands high quality standards consistently batch-after-batch. Getting qualified as a supplier is a long drawn process and requires a lot of testing, approvals and certifications.

ACG has a long history and experience of more than 55 years in making empty hard capsule shells for pharmaceutical customers. In ACG’s formative years, our key challenge was getting our capsules to run successfully on our customer’s filling machines. This was a critical aspect in passing the stringent approval criteria especially with MNC pharma companies. We soon mastered the technique and succeeded in making high quality capsules with consistency. In that process, we also gained engineering expertise and capabilities and went on to make our own capsule filling machines as well as capsule making machines.

We have remained on the forefront of research and development not only in new capsule products but equally into the engineering of making and filling capsules as well. These integrated capabilities along with our constant focus on quality, reliability and service has enabled our aggressive global reach to emerge as a leader in the business. In empty hard capsules industry, we are now Asia’s largest and world’s second largest manufacturer. Pursuing our value of customer centricity, we plan to have manufacturing plants in key global markets and be closer to our global customers. It will also help us increase our market share. Our long term strategic intent is to become a preferred supplier to global customers.

Would you like to brief us about the upcoming innovation in gelatine capsules?
Empty hard capsule as a component of solid oral dosage has remained a popular choice for over 300 years now and nothing in it has changed conceptually. However, it has evolved tremendously especially in the last 2-3 decades and a number of new variants have emerged that serve specific application needs. On the polymer side – multiple options are available as alternative to conventional bovine gelatin in the form of plant origin “vegetarian” material like HPMC and also the gelatin of fish origin. The trend continues with more vegetarian variants being explored like pullulan, starch, etc.

At ACG, innovation is an important strategic area and is driven by our customer centric approach. We focus on innovating solutions around customer needs – current as well as future. On the application side, we have successfully developed Flofit hard capsules for liquid filling & band sealing and Ezeeflo hard capsules for dry powder inhalation application – which are available in both gelatin and HPMC material. Similarly, there are capsules for ‘open and sprinkle’ uses, clinical trials, etc.

As far as conventional gelatin capsules, we have innovated four colour as well as 360 degree printing capabilities under our unique Brandshield range of capsules which are effective as anti-counterfeit solution and enhance brand identity and differentiation.

What are the drivers, restraints and opportunities that are influencing growth of the Indian empty capsules market?
Capsules are one of the most commonly used and popular oral dosages for administration of pharmaceuticals and nutraceuticals. With the growth of industry, demand for capsule is also growing in India.

Further, India is also a major manufacturer and exporter of generics globally and many of them are in capsule form. India’s leadership and competitive advantage in global pharmaceutical industry is a key driver of growth.

The policy and regulatory decisions in the pharmaceutical industry globally and in India are some of the challenges facing the capsules market.

What do you see the company’s competitive edge?
The biggest competitive advantage for ACG is our group’s capabilities across the value chain of solid oral dosage solutions delivery. From capsules, packaging films to tablet coating, tooling, encapsulation, blistering, cartooning machines and end-of-line inspection and track & trace technology solutions – we have it all. Our uncompromised focus on customer centricity and building our products, services and processes around the customer needs is also a critical competitive edge. We have strong research and development, engineering and large scale manufacturing capabilities that are unparalleled in the industry. Our global reach to more than 100 countries and trust of more than 1000 customers worldwide is the testimony of our quality, reliability and superior customer service that keeps us going and growing.

How challenging it was for the company to come up 100 per cent veg capsules, when majority of the manufacturers were against adopting the veg capsules. Also tell us how did you overcome this challenge?
ACG has the technology to manufacture HPMC capsules and have been manufacturing them since 2006. We have done pioneering work in creating awareness and demand for our Naturecaps HPMC capsules in India and also abroad. We have been successful in addressing the niche application needs of the market where HPMC proves to be a better alternative.

However, as a leading and experienced capsule manufacturer, we do not see gelatin and HPMC capsules competing as alternative to each other. Both have different characteristics and dynamics of their own. HPMC capsules are widely preferred by nutraceutical and dietary supplement manufacturers, which is still a small share of overall capsule consumption. The pharmaceutical sector widely prefers gelatin capsules. Manufacture of HPMC capsules also faces supply chain constraints as all the required raw material has to be imported. Through the platform of Capsule Manufacturers Association of India, the industry has made elaborate representation to the concerned policy and regulatory authorities. This includes the industry viewpoint with back-up data clarifying the safety of gelatin capsules for human consumption.

As of now ACG ACPL manufactures 83 billion capsules in 5 of its world-class factories in & around Mumbai. Do you have plans to expand capsule facilities in India and come up with new product line for consumers? After acquiring Croatian capsule firm, are you looking for opportunities to make additional acquisitions in Europe to strengthen your position in global market?
ACG has been consolidating its market leadership in India and also fast expanding the global footprint. Consistent to the group strategy, ACG ACPL also believes in building global competitive edge by being near to the customers. We have our largest manufacturing capacity in India and initiated the global strategy with acquisition of Lukaps in Croatia few years ago. Going ahead with the global capacity building, we are working on two new greenfield manufacturing plants – first in Brazil and second in Thailand. Both these regions (Latin America and South East Asia) are key strategic markets for us and the local manufacturing will certainly give us a competitive edge.

Sustainability and green initiatives have become buzz word in pharma space. But most managers in the pharmaceutical industry think that “green initiatives” are going to add cost, and in the current business environment this will not be looked at sympathetically. How do you make progress in your green or sustainable initiatives?
ACG is committed to doing business sustainably and responsibly, and the same reflects in our environmental policy and practices across establishments. ACG practices energy conservation and promotes use of clean energy alternatives through initiatives such as use of solar energy for hot process water, bio-diesel, heat pump etc. ACG ACPL’s most recent plant set up at Pithampur, Madhya Pradesh has received Gold level LEED (Leadership in Energy & Environmental Design) certification as a green building. This is a prestigious international recognition given by LEED, USA and CII’s IGBC (Indian Green Building Council) to the facilities that are designed, constructed and operated in the most environmental-friendly manner. Ours is the pharmaceutical facility in India to receive such certification. Our manufacturing facilities are also compliant to ISO 14001 standards on environmental management system requirements.