‘Time to innovate, do business differently’

Time has come for pharma firms to innovate and do business differently, says Dr Dinesh Dua, CEO and Whole-time Director, Nectar Lifesciences Ltd., and chairman, Pharmexcil, in an interaction with Vijay C Roy on challenges confronting the industry. Excerpts:

How the Covid has hit pharma industry? What is the status of production currently?

When the lockdown was imposed, we had several issues in terms of transportation and manpower movement. Though pharma firms had been classified as essential services and were allowed to operate, there was huge compression on both inter-state transportation and movement of manpower. Before the lockdown, capacity utilisation was around 80% across the country. It crashed to 20-25% in the first fortnight after the lockdown was imposed. However, things started improving and production rose to 40% but that is in Telangana and Andhra Pradesh. In North India, especially in the Baddi belt, it is not more than 30%.

To what extent domestic supply and exports are affected due to the lockdown?

Domestic supply is still operating at 25-30%, but the exports got a massive hit as the JNPT in Mumbai was shut down and there were no flights. On an all-India basis, we were looking at exports worth $22 billion, but due to the lockdown in March only, we missed the target by $1 billion in just five days.

Considering the current situation, what should be done to boost the xports?

Unless flights start operations, it is very difficult to improve the situation. Currently, freighter charters are available but they are available only for few locations and that too for fixed quantity.

Will a stimulus package revive the economy and how it should be implemented?

Definitely, as the pharmaceutical industry is dominated by the MSMEs, which contribute 75%. They are in desperate need of funds and so are the big companies. As their receivables are not coming, the entire cash flow is stuck. First and foremost, the government needs to give some kind of package in the form of salary and wages support. If nothing is done in a week or so, 50% units won’t be able to survive.

Many of the pharma players are complaining about spurt in prices of active pharma ingredients (APIs)? What is the current scenario?

Initially, the traders made a killing. Later, the prices came down by 50% as compared to what was quoted in the first 15 days of the lockdown. Meanwhile, some consignments started arriving from China, particularly at Delhi Dry Port. JNPT has started functioning around a week ago. We do have 25-30% supply now, but that’s not enough. We have around 20,000 formulators but only 4,000-5,000 are being served.

Can India become an alternative for APIs? What should the government do to promote API manufacturing?

Of course, yes. The government is absolutely allied to the situation and has conceptualised a policy. However, details are yet to be received. But broadly, there is incentive on incremental increase which will bring down the cost of manufacturing. For the capital cost also, there are provisions of subsidy and grant spread over eight years. The Cabinet note has been issued and it will be notified soon.

Will the pharma companies defer planned capital expenditure for the current year?

Yes. First you have to survive, then sustain and then stabilise.

What are the lessons learnt?

Differentiate wheat from chaff — the employees who have reported for work and those who haven’t. Secondly, technology is going to become an enabler. Video-conferencing and webinars are the order of the day. Thirdly, now is the time to innovate and do business differently.