Able ally

Able ally

Gujarat’s allied industry has played a major role in the success of the state’s pharmaceutical sector. Collective efforts in future will reap benefits for both of them. Sachin Jagdale reports

“Gujarat has been a strong base for finished formulations, active pharmaceutical ingredients (API), dyes and pigment manufacturers for a long time. This has only helped to develop allied industries like machinery manufacturers”

– Sandeep Shah Managing Director

Erweka India

It is not an exaggeration to state that Gujarat pharmaceutical industry is leading the Indian pharma industry on the domestic and global front. With the main hubs of pharma-based activities clustered in and around Ankleshwar, Ahmedabad, Vadodara, and the Bharuch-Vapi-Valsad belt and as the home to many domestic and international pharma and biotech companies, Gujarat contributes 40 percent of India’s pharma production. Till today industry has more than 3200 registered pharma units.

This figure is going to swell in the coming future as the recently concluded Vibrant Gujarat Global Investor’s Summit (VGGIS-2009) has promised to garner an investment of more than Rs 3249.31 crore in pharma sector.

Strong allied sector

The Gujarat pharma industry has a very strong backbone comprising the allied sector. In fact Gujarat has the largest cluster of pharma machinery manufacturers in India. What has made this allied sector flourish to this level in Gujarat? Sandeep Shah, Managing Director, Erweka India, says, “Gujarat has been a strong base for finished formulations, Active Pharmaceutical Ingredients (API), dyes and pigment manufacturers for a long time. This only helped to develop allied industries like machinery manufacturers.”

As the pharma industry expands, allied sector players are also contemplating increasing capacity. SCHOTT KAISHA, a manufacturer of pharma containers made of neutral glass, is very soon going to set up a new manufacturing facility at Vadodara. The company’s Managing Director, Kairus Dadachanji, opines, “Gujarat is in close proximity to Mumbai. Therefore the real estate price was much more attractive and for machine manufacturers this was essential. Besides the mentioned factors, Gujarat has high quality management personnel.”

However, Dadachanji voices some concerns as well. He says, “Packaging in South India is growing substantially. More and more industries are coming up in the south, especially Bangalore and Hyderabad. Hence this is encouraging more packaging industries to shift there as well.”

Mutual understanding

There is enough scope to say that the highly efficient allied industry in Gujarat is attracting pharma companies to set up their business in Gujarat. According to Shah, the close proximity of the allied industry helps pharma companies to get a faster response and service when they need spares. The user can also visit the machinery manufacturer’s place easily for trials. Moreover, in the case of machine breakdown, spares can be replaced quickly. In other words, it saves time and money.

The growth of pharma sector and allied sector is interdependent. Speaking about the co-operation between these two, Dadachanji says, “I expect very positive communication between allied and pharma sector. As people with required qualifications are available, high level management does not mind shifting from Mumbai to Gujarat. There are excellent working conditions and infrastructure (in Gujarat). Pharma industry is growing by 15 percent annually and with lots of focus on exports. They require high quality packaging and those who are located nearby and who can provide this quality will form long and stable working relationships.”

No dearth of opportunity

VGGIS-2009 was a great success. More than 90 pharma and allied sector companies from countries across the globe will be investing more than $614 million in Gujarat within the next two years. Compared to last episode of Vibrant Gujarat held in 2007, Vibrant Gujarat Summit in 2009 has witnessed a tenfold increase in the investment to be made in the pharma industry. It needs to be seen how allied industry can capitalise on this rare-to-find opportunity.

According to Shah, this will definitely give a boost in the current situation where pharma companies have reduced capex investment due to the current recession and slowdown. Dadachanji says, “The allied sectors’ main benefit will be the opportunities that come their way due to this investment. They need to cash in on this and convert them to excellent business potentials. They are assured of a steady and growing business and speedy government permissions to begin their exercise at the same time as that of the pharma companies hence synchronising their growth with that of the pharma industry.”

Collective efforts

Though allied sector in Gujarat is doing a great job of fulfilling the needs of domestic pharma sector, market observers comment that they should take their expertise overseas. It is necessary to evaluate the export potential of this sector. What are bodies like Pharmexcil doing or should be doing to promote pharma machinery exports? Shah opines, “Though pharma machinery export is on since two decades now, there is still good scope to improve. The recession/ credit crunch on economic front has forced US and European companies to reduce capex and here Indian machinery should be able to fill the gap by offering machines with almost the same features at half or even lower prices of European machines. Special attention should be given to pharma machinery by Pharmexcil in promoting such an allied segment.”

Shah elaborates on the measures that Pharmexcil can employ to promote the export of pharma machineries. He adds, “It can organise a dedicated pavilion in various worldwide exhibitions where booths can be given at concessional rates to machinery manufacturers. It can also organise lectures giving accurate information for maintaining standards for manufacturing machines as per Good Manufacturing Practices (GMP), current GMP, CE Marking and support documents for validation, calibration, auditer’s requirements etc. Many small manufacturers do not know the exact requirements and have to depend on the user’s request which varies from company to company.” Though many of these measures are already in place, the frequency and reach needs to be increased so that this ‘able ally’ can continue to strengthen its support to meet the evolving needs of the pharma sector.