Pharma packaging units to gain as drugmakers gear up to curb counterfeits

As pharmaceutical companies are keen to take steps to fight counterfeiting, pharma packaging machinery units are expecting a surge in demand as well as higher margins.

The National Pharmaceutical Pricing Authority (NPPA) is also mulling whether to allow pharma companies to raise their margins in packaging cost of medicines, which could further boost the packaging industry.

Currently, the pharmaceutical packaging sector in India is characterised primarily by blister packaging machinery, small scale blister packaging machinery, de-blistering machines and leak testing machinery. The dedicated production capacities of large players in the packaging sector contribute to nearly 50 per cent of the entire market, while the rest of the packaging is outsourced.

Pharma companies are now keen to invest more in packaging technology to fight counterfeit drugs, says Sanjay Gandhi, promoter of Krishna Foils, a Naroda-based packaging unit. "This would mean more margin for packaging units as well," he adds.

Gujarat-based pharma packaging units and packaging machinery units have been clocking a 15-18 per cent compounded annual growth rate. Ishika Industries, an Ahmedabad-based packaging unit claimed that orders had grown by 12 times in the last five to eight years.

Many packaging units in the state are also supplying material to the hilly states like Himachal Pradesh and Sikkim as several Gujarat-based pharma units have set up production plants in these hilly states to take advantage of the tax incentives. Krishna Foils too claims that there is huge demand from pharma units in Baddi (Himachal Pradesh), Hyderabad, Maharashtra apart from southern states like Chennai.

Interestingly, packaging and conversion cost account for nearly one-third of the price that consumers have to pay for a medicine. "If the NPPA allows more margin to the drugmakers in packaging cost, it would definitely boost the packaging industry at large," said a senior official of the Gujarat State Plastic Manufacturers Association (GSPMA).

For that matter, GSPMA points out that while the overall plastic packaging industry in the state has grown by 10-12 per cent last fiscal, the pharma packaging space has managed to do better, clock a 15-18 per cent growth. At the same time, a recent PlastIndia report outlines that currently the share of pharma packaging in the Rs 1,25,000 crore polymer processing industry is around 7 per cent, and therefore, there is huge potential for growth.

At present, there would be around 250 pharma packaging units in Gujarat clocking a turnover of close to Rs 1,000 crore, according to a senior official at the GSPMA.