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/2/11 President's Corner - Indian Pharma Machiner Manufactures Association

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President's Corner

Indian Pharma Machineries Background:

The Indian pharma industry was dominated by imported machines during the

sixties and seventies The move from being an import-dependent sector to

indigenous engineering companies received an impetus due to foreign

exchange shortages. The government imposed heavy import duties and

restrictive import licensing policies. which turned out to be a blessing in

disguise, because thts brought to the fore India's own engineering minds. who

soon s tarted making pharma m achinery at much m ore cost effective rates.

Current scenario:

Is the Indian pharma engineering and machiner sector a net eporter?

Are there certain segments here e still need to import machiner?

In value terms, there are more machines being imported today than exported. but in terms of

quantity, it is reverse This is because imported machines are more than seven to eight times the

value of the Indian machines. We still do not make machines requiring high technology and also

lab equipment required for R&D labs, therefore we still need to import these machines.

Reason for not manufacturing selected machines:

Those who import pharma machinery are setting up world class facilities to export products /

formulations, therefore they need to have imported machines as these meet these standards.

This is a niche market.

The demand for lab and R&D facility machinery is very low, but at the same time, it requires high

investment to develop this equipment. Putting up such infrastructure cannot be justified if the

demand is not so high. Therefore, we still import this segment of equipment.

Strengths of Indian pharma engineering and machiner plaers:

In one word, value for money. Indian machineries are extremely competitive and have a good price performance ratio. Secondly, Indian pharma machinery manu facturers have not yet got into the

culture of strictly adhering to contracts. So we give better after sales service, going beyond the

Annual Maintenance Contracts. We are very flexible for customers in terms of deliveries,

contractual terms, etc. Foreign manufacturers do not give s uch support to pharma manufacturers.

These are our major strengths.

Major competitors / countries:

Up to 2004-05 , Italy, Germany, South Korea were our m ain competitors. In recent years, there has

been a lot of interest and activity from Chinese suppliers of pharma machineries. It is still at the

initial stage but there is sizable penetration of Chinese suppliers into the Indian market. But we

have learnt that not all Chinese m anufacturers are good , some are bad m anufacturers. In certain

categories like distillation plants required for sterile products, you would not take a chance with

Chinese manufacturers because you have to be sure of the results. They have a mass

manufacturing capacity; they can make 200-300 machines in one go, while we can go only upto

ten at a time. That is the huge difference. Labour is cheap, raw material is cheape r, unlike in India.

But they do not have high-end technology. But it is definitely a source of worry for our indus try.

Issues facing the sector and ho can the be dealt ith:

The biggest is sue is that there is very low investment in R&D. Secondly, the manufacturers do not

work together and therefore it is a fragmented industry, of small scale manufacturers. One of the

agendas of IPMMA was to unite the industry, but unfortunately we have not been able to do this very

succes sfully. We have not been able to econom ically scale up and invest in R&D in a bigger way. If

we were to cooperate in marketing and R&D efforts, this could become a reality.

Another issue is the lack of trained manpower. This was not the scenario earlier but nowadays it

is a worry. Salaries have risen and this makes it difficult for small scale manufacturers to attract

and afford skilled and trained manpower.

Another unfortunate iss ue is that we cannot attract international m anufacturer for high value, high

tech products to have Joint ventures, for technology transfers. For this, we are continuously

working on im proving the brand image of our products and indus try but it is a problem.

In the engineering space, we have been able to overcome this perception to same extent. For

instance, Pharmalab has a tie up with a Finnish com pany called Elomatic for engineering design.

Pharmalab get technical support fromthem and do the engineering design here in India as this