Modernization of India’s Pharma Manufacturing Industry: “Leader” or “Laggard”

India, the home of more than 10,000 pharmaceutical manufacturing sites, is a major player in the global pharmaceutical market. The country manufactures the majority of the world's active ingredients for generic drugs, is the source of more than 90% of the medications used by Americans, and accounts for more than 60% of global vaccine production, according to data from US Pharmacopeia.

Consequently, India has an ambitious vision: to grow its pharma business to a value of $130 billion by 2030. According to a report from Acute Market Reports, the Indian pharmaceutical business was worth $42 billion in 2020 and is set to grow at a compound annual growth rate of 12% from 2020 to 2030. However, while the Indian pharmaceutical industry is the third largest in terms of volume, it ranks at just fourteenth in terms of value.

To enable rapid growth, India must advance its value proposition amidst intense cost pressures and competition. To stimulate the anticipated growth, it is evident that India needs to undergo a significant transition from generic drug producer to a producer of novel molecules and biosimilars through rigorous R&D initiatives.

Embracing Modernization

Modern technologies are critical in facilitating advancement of India’s pharmaceutical manufacturing industry, as they can enable many crucial process improvements:

• Virtual product design allows products to be produced, tested, or assessed virtually without physical prototypes, minimizing research time.
• Robust tracking systems automatically alter production to reduce logistics failures.
• Intelligent sensors and a connected value chain enable data interchange from design to production and supplier/customer integration.
• Autonomous robots provide flexible and adaptive production lines for many models and small customized lots, improving performance.
• Predictive maintenance links wirelessly to the cloud for big data and analytics, reducing downtime and improving maintenance.

The organizations that are most likely to have a competitive advantage in the Indian pharma manufacturing market are those who continuously adopt new technology, find ways to harness the technology, and promote business integration. Consequently, significant advancement is predicated on modernization of the complete pharmaceutical manufacturing process.

Technology First Approach – The Need of the Hour

Indian pharmaceutical companies are prioritizing technology to maintain and enhance their market position. All new pharma plants must meet standards set by FDA, World Health Organization, and Pharmaceutical Inspection Co-operation Scheme.

Similarly, an increasing number of Indian pharmaceutical companies are deploying cloud computing, as well as technologies like artificial intelligence/machine learning (AI/ML) and robotic process automation (RPA). This allows them to modernize supply chain processes, extract better insights from data, conduct modeling/simulations more quickly, accelerate the drug development process, and save significant time in drug commercialization.

As a result of the COVID-19 pandemic, Indian companies have adapted to the speed of global digital transformation adoption and increased supply chain efficiencies. Information Technology (IT) companies have been offering different subscription models to the pharma industry that best suit their payment structure. For instance, the “pay as you use '' model charges companies based on usage, making it ideal for expenses like utility bills.

Pharma 4.0 allows pharma businesses to leverage the internet of things (IoT), Cognitive Science, AI/ML, blockchain, and RPA in tandem, utilizing the digital cloud as a foundation. This helps pharma companies enhance distribution and supply chain management by accelerating production and reducing errors. Currently, a medium-sized IT company in India enables more than 150 to 200 pharmaceutical companies to modernize the pharma manufacturing process at some level.

Shifting Priorities to Create Smart Factories

The production capabilities of firms need to be increased in order to create more value-based pharma products. Existing operations in India need to be automated and digitized so that the companies can adhere to the appropriate standards and maintain precise control over the product's quality.

The front-end priority has always prevented Indian companies from focusing on shop-floor technologies, but upgrades to these technologies are increasingly becoming more global. The shop floor is undergoing transformation as a result of developments in the IoT, AI/ML algorithms, 3D printing, machine vision, advanced physical robotics, and parametric optimization.

Development of integrated production capabilities would provide Indian businesses, industries, and the country as a whole with a significant and long-lasting competitive advantage. Existing process technologies need to be scaled up for industrial application so that prices can be reduced. For instance, the University of Calicut discovered a promising method of producing penicillin from wasted fruit by using solid state fermentation rather than submerged fermentation technology. If that technologies like this could be enabled on a widespread scale, it could prove critical to widespread process improvements; the pharmaceutical industry in India must evaluate smart factory developments.

The Future of Indian Manufacturing

The Indian government has been actively partnering with pharma companies and has been allotting considerable funds for the construction of new pharma facilities, pharma research, healthcare schemes, and so on. These initiatives open new doors for the acceptance of technologies to enhance production efficiency like never before.

However, while technologies such as cloud AI are extensively deployed in the U.S. and Europe, in India modernization of pharma manufacturing is still in its infancy. Companies are finding use cases in many commercial operations and manual procedures to eliminate human interaction and improve accuracy.

As the labor costs in India are lower than in other countries, cost sensitivity must be considered a prime factor. Pharma companies are beginning to use AI and ML, but it's still in the proof-of-concept stage. India is only starting to utilize blockchain for transparent data sharing between contractors and suppliers. While skill and labor aren't a significant issue in India, unstable prices and policies impede sector expansion.

With the current pace and ambitions, active government involvement, and strategic collaborations, it is anticipated that in the coming decade India will grow to adopt advanced modernization technologies in the pharma manufacturing segment to be at par with the developed economies.

About the author

B.S Sathya Durga is Director at Acute Market Reports.