A report has enunciated short-term and long-term recommendations for revival of the industry.
New Delhi: The Indian pharmaceutical industry, which has made a mark within the country and also across the world in this hour of crisis in the wake of the Covid-19 pandemic, wants support from the government to revive ancillary units.
Despite the fact that medicines have been deemed as essential items, entities ancillary to pharma manufacturers (Active Pharmaceutical Ingredients/ Key Starting Materials/ Excipients/Packaging material) have faced adversities during the lockdown. Notably, the size of the ancillary pharma industry is about $9 billion and is a key contributor to its success. Moreover, Micro, Small & Medium Enterprises (MSMEs) have a significant salience of 55-60% within ancillaries, contributed by 10,000-11,000 units. The ancillary industries are located in places like Baddi, Ahmedabad, Vadodara, Vapi-Valsad, Mumbai, Hyderabad, Vizag.
The India Pharmaceutical alliance (IPA), in collaboration with Accenture, has conducted a study which details the best ways to revive the pharmaceutical ancillary industry and a way forward. The study was backed by a detailed exercise which included more than 100 interviews with ancillary players across geographic clusters and segments, interviews with large pharmaceutical companies and a study of the best practices adopted by Indian states and different countries. The study also entails a comprehensive set of recommendations for the pharmaceutical ancillary industry.
According to the study, 70% respondent industries said manpower availability was the current challenge being faced by them, 65% talked about logistics disruptions, while 58% said they were facing the problem of raw material shortage. As many as 50% of the respondents said their company was facing the problem of financial distress.
The report has proposed six recommendations to ensure that the industry reovers rapidly and emerges stronger than ever. These include delivering financial relief to ancillaries and enabling safe return of work force in the next three months. In the next six months, there should be an effort to develop robust disaster management capabilities and create an ecosystem to promote trust and transparency among all industry players. In the next 1-2 years, government should reduce reliance on imports from a single source and ensure competitive of the ancillaries in the new normal.
The report, however, says that the local labour availability will improve as respective state governments are facilitating their return. However, migrant labour shortage is likely in select clusters. “With lockdown relaxations, interstate movement and truck availability is improving. However, unclogging of sea ports is likely to take longer to resolve owing to workforce constraints,” the report says.
Satish Reddy, president of the India Pharmaceutical Alliance (IPA), said: “The ancillary industry is a vital part of the pharmaceutical supply chain. For the industry to function, immediate action is required to support the ancillaries by identifying interventions which will enable their early revival in select segments and clusters.” This report enunciates short-term and long-term recommendations for the revival of the industry. According to the findings, the short-term focus should be to provide disbursal of financial relief to MSME ancillaries and ensuring manpower attendance at work. Robust disaster management framework backed by greater transparency across the ancillary network needs to be implemented. Large pharmaceutical companies are providing necessary support to the MSMEs associated with it. Long-term goals include self-reliance to manage the dependence of API/KSMs/Capital goods imports on a single geography along with active mentorship by the industry to guide ancillaries manufacture efficiently in the post-Covid “new normal” era.
Sudarshan Jain, secretary general, IPA said: “The Indian pharmaceutical landscape is evolving. With the revival of the API industry and the ancillary industry, we are well on our way to become a self-reliant pharmaceutical sector. IPA will work collaboratively with all stakeholders to help implement the recommendations in the report to help industry.”