IGI Logo

The future is already here, just not evenly distributed

Campus learning at National Chemicals Laboratory (NCL)

NCL, Pune has a total of 400 technical staff, including ~100 scientists. The organization is funded by the government. It helps companies in product/process development, along with helping them understand the regulatory aspects. It also develops technologies on its own and licenses these out to various companies for commercialization. It has several pilot plants that aid in theory-to-commercialization. The organization has several verticals working on technologies such as biosimilars, hydrogen, ultra-filtration, and nanotechnology. It also has an incubation center that hosts as many as ~70 start-ups, ~56% of which operate in the field of Healthcare. We recently hosted a group of investors at the organization.

Process efficiencies – the prophecy for Indian companies

* For the past few years, chemical companies have been collaborating in several areas for better chemistry, solvent reduction, minimization / the use of byproducts, reducing effluents, and reducing the use of resources (including utilities). Some examples/drivers are as follows:

* India still imports ~65% of its solvents, and the reduction helps minimize production costs.

* By-products such as acetone (by-product of phenol) could be enriched into electronic-grade acetone.

* The use of heterogeneous catalysts could make separation easier, thereby reducing the number of process steps and costs.

* Batch processes take a lot of manual intervention, reducing consistency, raising production costs, as well as raising cycle time. The organization has helped develop continuous processes that lower the footprint of the equipment (by almost one-tenth), reduce the cycle time, and lower operating costs drastically. Heat removal is also much easier owing to the reduced surface area of the equipment.

* NCL has developed several mobile pilot plants to demonstrate process robustness and support scale-ups. For example, it has developed a unique ozone-based process for producing azelaic acid. It has patented the same and licensed this to companies. It has also developed a process to manufacture silver nanowires, which could be used for various applications such as touchscreen displays, technical textiles, spectroscopy, and computer boards.

West may whack China+1 benefit

* Our reading is that Indian companies have been doing well in terms of increasing their competitive edge. However, if they do not invest in R&D, production – especially of high value added products – is likely to return to the West. For example, CONTINUUS Pharmaceuticals in the US has developed fully integrated, fully automated modular packages for high-value, low-volume APIs.

* In the absence of PLI schemes, it is difficult to compete with China, which cuts prices by 30–40% when other producers come into the market. PLI schemes have been designed with this in mind, especially for drugs that are entirely imported to India.

if India fails to ramp up research and development capabilities

* Numerous companies – such as Vinati, Deepak Nitrite, Atul, Tagros, Laurus, Deccan Chemicals, PI Industries, and Astec – have been doing well in investing in R&D as well as adopting better processes. However, certain complex chemistries, such as ozonalysis, cyano compounds, and amoxidation, are still not being tried in India on a large scale.

* India has the largest FDA-approved pharmaceutical manufacturing plant base outside of the US and has been receiving an increasing number of orders from global pharma companies (fluorination could be the game-changer). While India lacks scientific innovation in the Pharma space, it contributes 27% in volume, but only 3% revenue-wise in the global Pharma space.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer