Report on business potential for production technology sector in the Indian

market for pharmaceuticals.

By Ankur Anand, PGPM 16-18, IIM Trichy

Market Potential in India

Indian pharma machinery market is expected to grow at 14% CAGR to reach 1.78 billion USD by 2020[1]. Key growth
drivers are

- Capacity addition for the generics production

- Sales to newer export markets

18% of total capital expenditure for a company is on plant and machinery.

Key Trends
- Indian exports pharma machinery and equipment to over 80 countries globally which contributes to approx.
35% to the industry turnover.
- Compared to pharma machinery hubs, like the ones in Germany, India has a high cost advantage in
manufacturing.
- Most of the potential export markets are in Latin America (USD 80 bn) and Middle East (USD 20 bn) as these
are under-penetrated and these regions increasingly source pharma machinery and equipment from India.

Government initiatives
- Government has announced that it would open three medical devices parks. 200- acre parks are being
established in Vishakhapatnam, Mihan and Nagpur.
- National Medical Device Policy 2015 focuses on R&D, testing and quality for domestic manufacturing.
- Requirement for NOC to be obtained from Ministry of Health is scrapped from 2016, for exports to developed
nations.
- The Government has launched voluntary scheme ‘ICMED’ or Indian Certification of Medical Devices to bring
international respect to medical devices which are made in India. [4]

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Growth Drivers in India

Indian pharma industry is projected to grow to 55 bn USD by 2020[2].

- Indian Government has launched ‘Pharma Vison 2020’ which aims to make India a global leader in end-to-end
drug manufacturing. This can be a great opportunity for pharma machinery suppliers.
- Under ‘Make in India’ initiative of the Indian government, 200bn USD is expected to be spent on medical
infrastructure in the next decade.
- FMCG companies are increasing their focus on human free sterile packaging which is also an opportunity for
machinery suppliers.
- 35-40% contribution to the Indian pharma industry is expected from pharma SMEs.
- Product patents have been introduced in India and several multinational companies are expected to launch
their patented drugs in India which will result in a surge of demand.
- Significant rise of lifestyle diseases in India will also result in boosting pharma industry sales figures.
- Indian government allows up to 100% FDI in the pharma sector under the automatic route for greenfield
projects and through the government route for brownfield projects, which is expected to bring in more
investment in the country.

Major companies
Pharma machinery manufacturing is dominated by small payers, mainly located in Maharashtra, Gujarat, Haryana
(cheap labour), Delhi NCR (proximity to central government) and Karnataka & Tamil Nadu (high-skilled labours)
in India. These companies generally form a joint venture with a foreign firm and manufacture their specialized products
here in India, which ensures manufacturing world-class products at affordable prices. There are almost 400 organised
machinery makers here in India [3], who export Rs 200 crores worth of machines to foreign countries. Some of
these players in India are -

Parle Global Technologies

Employee Strength – 800. Exports to 56+ countries. Specialization in tablet compression tools.

Locations – Mumbai, Ahmedabad.

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ACG Worldwide
Associated Capsule Group has a presence in over 100 countries. ACG group comprises of 13 companies, including
subsidiaries in China, USA, Indonesia, Brazil and Europe. Manufactures empty hard pharma capsules, packaging
machines and films.

Locations – Mumbai

Prism Pharma Machinery

Annual Turnover – USD 2-5 million, Employee strength – 51-100. Specializes in tabletting, mixing and vacuuming
machineries.

Location – Mumbai

Gansons Limited
Employee strength – 100-500. Specializes in Granulation and coating equipment.

Locations – Delhi, Kolkata, Ahmedabad, Mumbai

Ambica Pharma
Specializes in filling, stoppering, capping, external washing, inspection & labelling machines.

Location – Ahmedabad

International companies in this field are also using India as a manufacturing base by either setting up facilities of their
own or by acquiring domestic manufacturers. Some examples include 3 M's manufacturing plant in Pune, Becton
Dickinson's manufacturing facility in Haryana, Hollister's setting up manufacturing facility in India and Philips Medical
Systems' acquisition of Medtronics and Alpha X-Ray Technologies. [4] Some well-known companies who identified and
tapped opportunities at the right time are the following -

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Shift in the presence of companies in pharma machinery

Market Access options

Depending on the size, strategy, product portfolio and access to human and capital resources, an organisation can
enter the Indian market though the options mentioned above.

The recommended way for international pharma machinery companies is through the distributors initially to market
their own products. If the companies plan to export the machineries to other countries, then they can leverage low-
cost manufacturing of India and set-up/acquire a manufacturing plant here. If the company size is small, then they can
form strategic alliances (joint ventures) with domestic companies here to provide access to technology and produce
high quality and low cost products. Eventually, when the scale gets larger, then brownfield or greenfield investment
is also an option.

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Opportunities for domestic and MNCs in India
Because of the policies by the Indian government listed above and expected framework streamlining on the way, more
funds and technology are on the way into India.

Conclusion
Indian pharma machinery industry is poised for huge growth due the factors listed above. The domestic market caters
to low-value supplies, disposables space, some SMEs have formed joint ventures with international companies to
manufacture medical devices in India and for export too, while the costly and high end medical equipment is generally
imported.

Many MNCs have started manufacturing in India and the domestic players are also getting stronger. Government is
also paying attention to the high growth market by allowing up to 100% FDI and giving other incentives. Some states,
like Gujarat in particular, are pushing for companies to set up their manufacturing units in their states by providing
additional incentives. With all the upcoming regulatory, policy reforms and market development in this sector, Indian
market is getting ripe.

References
[1] Indian Pharma Machinery Market to Reach USD 1.78 b by 2020. Business standard -
https://www.usq.edu.au/library/referencing/apa-referencing-guide#Journal_and_newspaper_articles

[2] IBEF (Indian brand equity foundation).

[3] http://www.pharmaceuticalmachinery.in/pharmaceutical_machinery_global_market.htm

[4] https://www.ibef.org/arab-heatlh-2017/download/The-Indian-Surgical-Equipments.pdf

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