Consolidate, Collaborate, Create value – unleash the potential of the Indian pharma engineering sector

There's an unfortunate level of narrow-mindedness plaguing our industry, which I keep pointing out on various forums.?

Amid the COVID-19 crisis, the Indian pharmaceutical industry stepped up to the challenge, making such an impact that it was globally recognised as the "pharmacy of the world". Yet, despite quality enhancements, the pharma sector is grappling with quality control issues just like any other industry. However, I am wholly confident that we will not only strengthen our position but emerge even stronger on the other side of these challenges.

Often, the applause is reserved for the pharmaceutical industry, while the monumental efforts of the pharma engineering sector, working tirelessly behind the scenes, go unnoticed.

The potency of the pharma engineering sector is crucial for pharmaceutical companies to exploit their potential fully. Our innovative problem-solving, cost-effective manufacturing and production of import substitutes make our projects cost-viable and our return on investment attractive.

However, significant concern remains.

The pharma engineering sector has grown to such an extent that companies are fiercely competing with one another and ultimately detracting from each other's efficiency. This is deeply worrying.

Despite playing such a pivotal role in pushing the pharma industry forward, why is our sector struggling? Why is there so much untapped potential?

Only a handful of companies have surpassed the modest mark of ?100 crore. While other industries, including the pharma industry itself, have experienced consolidation, the pharma engineering sector still seems hesitant to evolve its mindset about value creation through consolidation.

The time has arrived for us to leverage our potential, capitalise on our strengths, conquer our insecurities, entrust professionals and the right talent to lead our companies, and truly unlock value.

We must aim to establish alliances, collaborations, and partnerships, shifting our perspective from a purely profit-driven approach to one that prioritises value creation. For over a decade, my team and I have worked diligently towards this goal, reaching out to friends and competitors for collaboration and engaging investment bankers and advisors for support. As a result, we've achieved significant success, and the journey continues.

Six years ago, we infused confidence capital in TSA. With dynamic leaders like Apurva Shah, TSA and Rajiv Parikh and a strategic management approach, this capital infusion served as a potent catalyst for growth, propelling the company's turnover from ?16 crores to a spectacular ?116 crore IRS this year.

We then identified Pacifab, investing in Vinod Sawant 's dynamism and inviting Parle to join the venture. Their professionalism, experience, and reach, combined with Vinod's impeccable technical initiatives, resulted in a 45,000 sq ft facility and a growth surge from ?1 crore to 20 crores IRS within a few years.

We are now investing in an oral solid process start-up to consolidate our granulation offerings, merging our company FaBL International Technologies LLP , with the start-up to optimise resources and focus on core strengths.

Several other investment initiatives have taken place, with more people joining the platform.

Our journey has been marked by challenges, not in finding the right talent and companies but in overcoming mental obstacles.

The most formidable hurdle is relinquishing control. Most cannot accept that others might be better equipped to run merged entities. They cannot distinguish between entrepreneurship and professionalism and understand the difference between dividends and salaries, profits and value.

Recently, several family-owned enterprises have sought our assistance as they've hit a growth plateau, unable to push past the ?16-20 crore mark. These businesses are stretched thin, grappling with burnout, and must tap into their full potential. Yet, they are reluctant to seek guidance through investments.

It's important to remember that while a business consultant provides valuable advice, an investor brings more to the table. They are vested in introducing synergy, a network, and opportunities. Plus, they're eager for you to lead without the risk of burnout.

Often, I hear these businesses say they are building for future generations. However, remember that the next generation may require a more advanced platform. Or they might lack your entrepreneurial spirit. The next generation (or successors) could be far less ambitious than the one that built it all. However, they are often highly educated, well-informed, and capable of contributing at a board level rather than an executive one.

There may be exceptions to this norm, but the decision to manage your business should be an option for your successors, not an obligation.

The choice is now yours.

Would you prefer to saddle them with ownership of a small business or bequeath them generational wealth in a flourishing multi-crore 1000 crore enterprise?

Let me make it clear that my group and I are profoundly dedicated to this sector and its vast potential. So much so that I am willing to adapt our strategy and invest in a business that holds real promise, as TSA and Pacifab have demonstrated.?