Growing export demand for hard gelatin capsules during the last three years has pushed up the capacity utilization of pharmaceutical grade gelatin in the country. The gelatin manufacturing capacity has thus gone upto 10,000 tonnes from the level of 6000 tonnes three years ago.

Three leading manufacturers of pharmaceutical grade gelatin namely Sterling Biotech, Shaw Wallace and Rallis India have been thus registering a 15 per cent increase in their sales. The total installed capacity for pharmaceutical grade gelatin in the country is 20,000 tonnes. "Till 2000, the capacity utilization of gelatin manufacturers was just 50 per cent. With the current rate of export demand for gelatin capsules, these units are able to utilize 80 per cent of their installed capacities. Sterling Biotech recently expanded its capacity by 4,000 tonnes," said a market source.

Sterling Biotech, Shaw Wallace and Rallis India control about 90 per cent of the total domestic gelatin market. The domestic price for gelatin is at Rs. 1.5 lakh per tonne. "We control about 40 per cent of the domestic PG market," said Nitin Sandesara, Chairman, Sterling Biotech.

It is the price advantage that is motivating the manufacturers of gelatin capsules to look towards the overseas markets. "On account of better pricing, the Indian hard gelatin capsule maker is constantly looking for newer markets overseas. There is tremendous scope overseas," said Ajit Singh, Chairman, Associated Capsules Group. The average domestic price of a gelatin capsule is Rs. 62 per 1,000 capsules in the domestic market. Compared to this price, the product is priced at $ 2 per 1000 capsules in third world countries like Sri Lanka, Bangladesh and Iran and $ 4 in the United States.
The estimated market potential for gelatin capsules is Rs.1,000 crore for capsules per annum and it is growing at the rate of 10 per cent.

Indian PG manufacturers have forged strong alliances with companies based in US and Europe. During the first week of April, Sterling Biotech received PG supply orders worth Rs 22.5-crore from the US-based GNC Group and Cardinal Health Inc.

Globally, there are only about 25 PG manufacturing companies controlling a market worth 1,50,000 tonnes, which is growing at about 5 per cent annually. "PG is priced at Rs. 2.5 lakh per tonne overseas. However, Indian companies have the advantage of supply high quality product at cheaper rates," said Sandesara.

"With a fast expanding global pharmaceutical market catalyzed and the nutraceuticals market at 40 per cent in US and European markets, the potential will remain bullish both for capsule and gelatin manufacturers," said a senior official in Shaw Wallace.