Pharma machinery firms expect brisk sales to SMEs

Orders from SMEs have increased in the last couple of years, and now constitute nearly 30-35% of the total order book

With Gujarat's small and mid-sized drug companies eyeing rapid export growth, pharma machinery makers in the state are expecting a surge in demand this year. Orders from SMEs have increased in the last couple of years, and now constitute nearly 30-35 per cent of the total order book. The share is rapidly increasing because companies need state-of-the-art machinery in order to ensure regulatory compliance.

Gujarat-based machinery manufacturers almost unanimously point out that they expect robust growth this year, as orders from SMEs are likely to increase by at least 25-30 per cent. Bharat Panchal, owner of Brinda Pharma Technologies, which runs a plant near Odhav in Ahmedabad, pointed out, "Orders from smaller pharma companies have already started pouring in. Earlier, we were supplying to big pharma companies like Zydus Cadila, Intas Pharma, Amneal, Glenmark, Panacea Biotech, Lupin and Cipla. Now we are also getting orders from smaller firms."

Smaller pharma manufacturing units usually use older, semi-automatic machinery. However, with the focus on exports, these units now need to install state-of-the-art machinery, Panchal explained. The trend started in the last two to three years. Machinery firms expect a revenue boost of 20-25 per cent in the current fiscal year.

Gujarat houses more than 200 WHO-GMP certified manufacturing units, and of these, pharma SMEs have clocked 15-20 per cent growth in exports to semi-regulated markets this year. This is in contrast to big firms, which are struggling on the export front, thanks to issues with the US drug regulator.

K S Chhabra, managing director of Hindustan Biosynth, a Vadodara-based pharmaceutical firm, said that most SMEs from the state are exporting to countries like the Philippines, Sri Lanka and Thailand in the Asian region, apart from countries like Nigeria, Kenya and Ghana in Africa.

"Some of the SMEs have even managed to clock a growth rate of over 20 per cent," he claimed. Given that the Drug Price Control Order (DPCO) 2013 has made the domestic market more competitive, more and more SMEs are now focusing on exports to boost profit margins.

Panchal said, "While the share of orders from SMEs is on the rise, big pharma firms would, nonetheless continue to drive revenues in the immediate future. However, SMEs would definitely contribute to volumes." Rahul Jain of Adinath International, another machinery-making firm, said that it has been getting orders from Synchem Pharma and Parenteral Drugs India Ltd, and they have been rising in the last two years.

The state government too is working on developing a pharma machinery cluster in Sanand to house these precision engineering companies.