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Growing pharma sector to propel lab chem market

Anurag More, Mumbai
Thursday, December 31, 2020, 08:00 Hrs  [IST]

The Indian laboratory chemicals industry is poised to grow at a healthy CAGR over the next five years. The significant increase of chemical usage in research and development for large scale commercial applications coupled with growing pharmaceutical sector in the country is expected to propel the market in the coming years, according to Karan Chechi, research director, TechSchi Research.

The market for high-purity chemical production, distribution, and sales for use in pharma is highly competitive. Most of the products are made to standard specifications and are either produced by or sourced from multiple sources, such as petrochemical companies, chemical manufacturing companies, and chemical distributors. The demand for lab chemicals has been increasing steadily due to their increased use by pharma and biotech buyers, at about 38 per cent of the market, followed by research institutions and CROs at 32 per cent. The demand for lab consumables by the life sciences segment alone, including pharmaceutical, biotech, healthcare, and contract organisations, grew at an estimated five to seven per cent – a growth rate that is expected to continue, according to a research report.

“Medical diagnostic services in India have grown in lockstep with the healthcare industry, which has become one of the country’s largest sectors in terms of revenue and employment. Over the last few years, there has been a spurt in the number of diagnostic centres across the country. Large scale commercial application and increased use of laboratory chemical reagents for research and development activities has further amplified the demand for lab chemicals in recent years”, said Gaurav Kaushik, managing director and CEO, Meteoric Biopharmaceuticals.

Prospects in near future
India’s healthcare industry is growing at a robust pace on the back of factors like greater health awareness, increased prevalence of lifestyle ailments and better insurance penetration. India is also a key player in the global pharma space and is making rapid strides in the biotechnology segment. Rising investments in research and development as well as growing demand from healthcare and biotechnological industries are likely to contribute to the industry’s growth, Kaushik added.

Recent technological advancements such as cell culture, monoclonal antibody therapeutics and recombinant DNA would further aid the industry. Over the near run, as pharma players intensify their efforts to develop a vaccine to combat Covid-19 and as global travel restrictions continue to mandate testing for travellers, the demand for lab chemicals is likely to remain buoyant. More specifically, rapid test technology (antigen testing and antibody-based diagnostics) is fast evolving with an urgent need for large-scale production of testing kits.

Several companies are investing in research and development activities to develop innovative and advanced medicines. Research and development of highly efficient and less or no side effects pharmaceutical drugs would drive India laboratory chemicals market. Also, there has been an increase in the number of clinical trials over the last few years as more and more companies are coming up with new drugs or products for the welfare of human health. This in turn is increasing the number of clinical trials to ensure the efficacy, safety and quality of the products. In addition, growing demand for contract research organization (CRO) and digitization in medical research by various start-ups for conducting clinical trials in the pharmaceutical sector is further driving the overall market of India laboratory chemicals market.

Region wise, south is the dominant region in India laboratory chemicals industry, followed by the western region. In 2020, Telangana contributed more than 35 per cent of API and finished dosage produced in the country. Western region is the petrochemical and agriculture hub of the country. Major industrial players such as Reliance India Limited, Indian Oil Corporation Limited, Rashtriya Chemicals and Fertilizers Limited, etc., are based in the western region. Favourable geographical conditions and proximity to major ports are the major factors boosting India laboratory chemicals market in the region, said Chechi.

Challenges faced by industry
While talking about challenges faced by the industry Kaushik said, one of the key challenges faced by the industry is technological education. Non-effective co-ordination among academics-analytical testing demand for a joint industry-government initiative to develop a robust lab chemical industry. This should also help with the existing lack of co-ordination with the lab chemical industry when a drug development is on. There is also a need of cutting down cost and increase efficacy with more scientific tool and hardware and software.

One of the major challenges faced by the laboratory chemicals market is high R&D cost. Laboratory chemicals for downstream industries has to pass the stringent government norms before getting commercialised. These policies ensure the quality and health and environmental impact of the product entering the market meets the required standards. However, while rigorous regulatory procedures guarantee the quality of the chemical, it increases the R&D cost of these chemicals. Also, it delays the entry of a raw material chemicals into the market, Chechi added.

Steps required to boost industry
There were widespread disruptions in the global supply chain due to closure of plants in China in view of the government’s increasing focus on environmental regulation and subsequently due to the coronavirus outbreak. In view of this, India needs to scale down its dependency on other geographies for import of chemicals. Ideally, we need to improve self-sufficiency and increase exports, while improving our R&D capabilities and access to feedstock, augment capacities and facilitate technological developments, all of which will help domestic players cater to the upcoming demand, pointed out Kaushik.

The chemical industry is acting as the major backbone for the commercial and agricultural development in India. Growing healthcare expenditure will boost India pharmaceutical market, which will further propel the market for laboratory chemicals in the coming years. India is one of the major markets for contract manufacturing services (CMS). Global pharmaceuticals companies outsource research, manufacturing or any intermediate services to Indian contract manufacturing organizations. Companies operating in laboratory chemicals market are recommended to form alliances or partnerships with global companies operating in chemicals and pharmaceuticals markets, added Checchi.

Coronavirus impact on lab chemical market
Talking about the impact of coronavirus on Indian lab chemical market Kaushik said, India had planned a two-pronged testing approach to contain the spread of Covid-19  - mass rapid antibody tests for mass screening followed up with the reverse transcriptase polymerase chain reaction (RT-PCR) test. However, rapid test kits imported from China were found to be faulty. Domestic production of these kits was also not easy as there is heavy reliance on imports of chemicals from China for development of these kits.  These include enzymes and other biological materials as well as tools such as vials, nasopharyngeal swabs and viral transport mediums (VTM). However, to ensure the sustained delivery of testing kits, Indian players are looking at developing low-cost alternatives to the testing kits and diagnostic devices that can be used even in poor resource settings.

With the current pandemic situation and rising awareness about healthcare, clinical trial industry is constantly evolving in the country. Also, India has an edge among its peers due to knowledgeable work force, cheap manpower and GMP approved manufacturing facilities. The high cost of product testing in western countries and negative sentiments towards China due to current pandemic have opened up opportunities for Indian laboratory chemical industry in the near future. Price competitiveness and manufacture of the generic drugs in a cost-efficient manner for pharmaceutical industry would be the key drivers for India laboratory chemical industry, feels Chechi.
According to Chechi, due to onset of COVID-19, disruptions in business cycles are bound to impact the demand for all core industries, globally. The virus outbreak has affected availability, price, trade and industries worldwide. With the onset of COVID-19 pandemic, the procurement of chemicals has majorly been affected because of the short supply and rising price from China. Also, the distribution channel of major industries has been disrupted due to lockdown situations. Moreover, business risks identified by leading core manufacturers may also be on account of isolation and quarantine, leading to manpower shortage. COVID-19 pandemic resulted in a decline in revenue of all major companies.


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