 "India is moving higher on our agenda: Richard Ridinger")
Lonza is a Swiss-based, 118-year-old company, which is among the world’s largest contract manufacturers catering to the bio-pharma sector. With $3.64 billion in sales in 2014, Lonza looks to invest further in India. Lonza Group CEO Richard Ridinger spoke to Rajesh Bhayani on the company’s plans for India and the challenges the sector as well as the firm is going through. Edited excerpts:
Do you see the business environment for pharma sector contract manufacturing changing?
In the pharma sector, a lot of innovations are taking place in biological sector and many new drugs are coming in. This means there is a huge demand for biological manufacturing. While there is still a lot of supply in chemicals, in bio-pharma, capacities will be well-utilised for the next few years.
It is true that many bio-pharma companies are setting up their own capacities. But there are still a lot of innovations, and demand is very strong throughout the industry. As I can see, pipelines are fuller now than a few years ago. For the next few years, demand is likely to remain strong. At this moment, I don’t see a demand challenge as innovations are so strong.
Is the company’s business outlook equally good for chemicals?
We have a much wider portfolio than just bio-pharma. Apart from bio-pharma, we provide services for developing drugs, fast-moving consumer goods, health-care solutions, etc. We have naturally expanded into agro solutions, too. Most of our pharma company clients have in the past spun off agro solution activities into separate companies as basic technology in that field are also small molecules and fine chemicals. That is also a growing area where we have presence. So, business-wise, we don’t see problems that cannot be tackled in the foreseeable future.
What are your plans for India?
We already have R&D (research and development) facilities at Hyderabad, but we have plans to do even more in India. We are currently talking with several big companies, including pharma/biotech and chemical firms. This step will be the beginning of a journey in India. Though we had a small presence, we now see the time is right for investing in India. We will not invest in heavy chemicals, though. We will be selective. Investment will depend on the business case; and if the case holds, funding will be available. India is moving higher on our agenda.
Why now?
In the present situation here, there is a positive tone for foreign investment, which I see as a precondition for building trust.
Globally, regulations for pharma industry are getting tighter. How is that impacting business environment?
Regulatory compliance has always been an important part of this business. Regulations, whether industry likes it or not, are getting more and more harmonised globally. This harmonisation has already been achieved regionally in many cases. Regulators everywhere have to find a balance between the need for industry to have reliability and the need to have security for any investment. Those countries where this balance has been achieved will have a competitive advantage.
Regulations for different markets are different. How do you manage in that scenario?
The US, for example, has matured in regulating the pharma industry; and it is the biggest market for pharma products. In developed markets, the bars are getting higher for regulatory and quality issues.
There may be markets where quality standards may not be as high. In emerging markets, I know many companies did have problems in complying with the high standards of the developed world. For Lonza, that isn’t a problem as we are aware of the regulatory requirements and we invest heavily in maintaining quality.
Innovations are also resulting in one-time reactors being used in place of stainless steel reactors. How is that trend impacting business?
In certain cases, single-use or disposable reactors would be useful in supporting innovations taking place in the pharma industry. However, this cannot be a universal answer as in certain cases, such single-use reactors may not be a best solution. Disposables also support good technical innovations and have a value when there are many changeovers.
Do you see the business environment for pharma sector contract manufacturing changing?
In the pharma sector, a lot of innovations are taking place in biological sector and many new drugs are coming in. This means there is a huge demand for biological manufacturing. While there is still a lot of supply in chemicals, in bio-pharma, capacities will be well-utilised for the next few years.
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Pharma companies are increasingly setting up their own capacities rather than opting for manufacturing on contract basis. How are you managing such challenges?
It is true that many bio-pharma companies are setting up their own capacities. But there are still a lot of innovations, and demand is very strong throughout the industry. As I can see, pipelines are fuller now than a few years ago. For the next few years, demand is likely to remain strong. At this moment, I don’t see a demand challenge as innovations are so strong.
Is the company’s business outlook equally good for chemicals?
We have a much wider portfolio than just bio-pharma. Apart from bio-pharma, we provide services for developing drugs, fast-moving consumer goods, health-care solutions, etc. We have naturally expanded into agro solutions, too. Most of our pharma company clients have in the past spun off agro solution activities into separate companies as basic technology in that field are also small molecules and fine chemicals. That is also a growing area where we have presence. So, business-wise, we don’t see problems that cannot be tackled in the foreseeable future.
What are your plans for India?
We already have R&D (research and development) facilities at Hyderabad, but we have plans to do even more in India. We are currently talking with several big companies, including pharma/biotech and chemical firms. This step will be the beginning of a journey in India. Though we had a small presence, we now see the time is right for investing in India. We will not invest in heavy chemicals, though. We will be selective. Investment will depend on the business case; and if the case holds, funding will be available. India is moving higher on our agenda.
Why now?
In the present situation here, there is a positive tone for foreign investment, which I see as a precondition for building trust.
Globally, regulations for pharma industry are getting tighter. How is that impacting business environment?
Regulatory compliance has always been an important part of this business. Regulations, whether industry likes it or not, are getting more and more harmonised globally. This harmonisation has already been achieved regionally in many cases. Regulators everywhere have to find a balance between the need for industry to have reliability and the need to have security for any investment. Those countries where this balance has been achieved will have a competitive advantage.
Regulations for different markets are different. How do you manage in that scenario?
The US, for example, has matured in regulating the pharma industry; and it is the biggest market for pharma products. In developed markets, the bars are getting higher for regulatory and quality issues.
There may be markets where quality standards may not be as high. In emerging markets, I know many companies did have problems in complying with the high standards of the developed world. For Lonza, that isn’t a problem as we are aware of the regulatory requirements and we invest heavily in maintaining quality.
Innovations are also resulting in one-time reactors being used in place of stainless steel reactors. How is that trend impacting business?
In certain cases, single-use or disposable reactors would be useful in supporting innovations taking place in the pharma industry. However, this cannot be a universal answer as in certain cases, such single-use reactors may not be a best solution. Disposables also support good technical innovations and have a value when there are many changeovers.