Small but Mighty: The Journey of India’s Small Pharmaceutical Companies Going Global

By Jaya Prakash Pradhan

Posted on December 6, 2008

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PART 1: SETTING THE STAGE

The Big Challenge Small and medium pharmaceutical companies in India face a critical moment: adapt to global competition or risk being left behind. While they’ve historically been the backbone of India’s pharmaceutical industry – making up 91% of companies and employing 65% of the workforce – their share of exports has plummeted from 37% in 1986 to just 2.4% in 2001. What’s holding them back, and more importantly, how can they break into global markets?

Why This Matters

For the Economy: SMEs are crucial for employment, regional development, and affordable medicine
For Innovation: They’re often more nimble and can fill market niches
For Global Health: They can provide affordable medicines worldwide

A Tale of Two Worlds: Large vs Small Pharma Imagine two pharmaceutical companies in India:

Large Corp: Well-funded R&D, international offices, sophisticated marketing
Small Corp: Limited resources but nimble, struggling with basic modernization

The gap is widening. Large Indian pharma companies are going global while SMEs struggle to keep up. But some small companies are breaking through – how are they doing it?

PART 2: THE SUCCESS FORMULA

The Four Pillars of Global Success Based on extensive research, successful pharmaceutical SMEs share key characteristics:

Innovation Matters Most

Case Study: Tonira Pharma
- Started small but invested 10% of sales in R&D
- Now exports to 40 countries
- Key lesson: Even small R&D investments can yield big returns

Quality is Non-Negotiable

The GMP Challenge
- Good Manufacturing Practices are essential for exports
- Success story: How Ozone Pharmaceuticals became an early GMP adopter
- Practical guide: Steps to achieve GMP certification

Strategic Marketing

Beyond Price Competition
- Building international networks
- Finding niche markets
- Using digital marketing effectively

Smart Financing

Making Limited Resources Work
- Government schemes available
- Creative financing options
- Cost-effective expansion strategies

PART 3: PATHWAYS TO GOING GLOBAL

The Export Route: First Steps Abroad Think of entering global markets like learning to swim – most companies start in the shallow end (exports) before diving into deeper waters (foreign investments).

Success Stories That Light The Way

The Innovation Champion: Fermenta Biotech

Before: Small enzyme manufacturer
Strategy: Heavy R&D investment (9% of sales)
Result: 41% export intensity
Key Lesson: Found their niche in specialized enzymes

The Quality Leader: N G L Fine-Chem

Focus: Veterinary medicines
Strategy: ISO certification + cGMP compliance
Result: 70% export intensity
Key Lesson: Quality standards opened global doors

The Market Pioneer: Paras Pharmaceuticals

Approach: Created subsidiaries in UAE and USA
Strategy: Used foreign offices as launch pads
Result: Doubled exports in two years
Key Lesson: Local presence matters

The Investment Route: Taking The Plunge

Five Ways to Invest Abroad (From Lowest to Highest Risk)

Liaison Offices
- Like having a business card in foreign markets
- Low cost, low risk
- Examples: Jagsonpal’s offices in New York, Belarus
Marketing Joint Ventures
- Sharing costs and risks with local partners
- Access to established networks
- Case Study: Venus Remedies’ European strategy
Sales Subsidiaries
- Full control over marketing
- Higher investment needed
- Success Story: Paras Inc. in USA
Manufacturing Joint Ventures
- Access to local production
- Technology sharing risks
- Real Example: Rusan Pharma’s approach
Manufacturing Subsidiaries
- Complete control
- Highest risk and investment
- Case Study: Venus Pharma GmbH in Germany

PART 4: THE GOVERNMENT’S TOOLBOX

Current Support Systems

Financial Support
- Special venture capital funds
- Priority sector lending
- Tax benefits for R&D
Technical Support
- Quality certification help
- Training programs
- Research collaboration support
Market Support
- Export promotion councils
- Trade fair assistance
- Market intelligence

What’s Missing: The Reform Agenda

Information Gap

Current: Many SMEs unaware of available support
Needed: Better communication and outreach
Solution: Local information centers and online portals

Financial Support

Current: Complex procedures, high collateral requirements
Needed: Simpler, more accessible funding
Solution: Special SME export finance schemes

Technical Support

Current: Limited access to testing facilities
Needed: Shared infrastructure
Solution: Cluster-based common facility centers

Market Intelligence

Current: Fragmented information
Needed: Comprehensive market data
Solution: Centralized export intelligence system

PART 5: PRACTICAL ROADMAP FOR SMEs

Step-by-Step Guide to Going Global

Assessment Phase (3-6 months)

Evaluate readiness
Identify target markets
Review resource requirements

Preparation Phase (6-12 months)

Upgrade quality systems
Develop export strategy
Build necessary capabilities

Market Entry Phase (12-18 months)

Start with easier markets
Build relationships
Learn from experience

Expansion Phase (18+ months)

Increase market presence
Consider foreign investments
Build global networks

Critical Success Factors

Start with strong domestic base
Focus on quality from day one
Invest in R&D within means
Build international networks
Use government support effectively

Common Pitfalls to Avoid

Rushing into difficult markets
Neglecting quality standards
Underestimating resource needs
Ignoring market research
Going it alone without support

The Bottom Line Indian pharmaceutical SMEs can succeed globally with the right strategy, support, and persistence. While the challenges are real, the opportunities are greater. Success requires:

Strategic approach to internationalization
Focus on building core capabilities
Effective use of government support
Learning from successful examples

The future belongs to those who can combine the agility of small firms with global standards and reach. It’s a challenging journey, but as the success stories show, it’s entirely possible with the right approach and support.

Academic Abstract:

In a rapidly globalizing world, India’s small and medium pharmaceutical enterprises (SMEs) face a critical turning point. Once comfortable in a protected domestic market, these companies must now compete globally or risk obsolescence. This transformation isn’t just about corporate survival—it’s about maintaining India’s pharmaceutical ecosystem, which relies on SMEs for employment, drug production, and affordable healthcare.

This book presents the first comprehensive analysis of how Indian pharmaceutical SMEs can successfully enter global markets through exports and foreign direct investment (OFDI). Through rigorous empirical analysis and in-depth case studies, it reveals both the obstacles and opportunities these companies face. The research breaks new ground by providing the first detailed sizing of India’s pharmaceutical SME sector and employing advanced methodological approaches to analyze their export behavior.

The findings challenge conventional wisdom about small companies’ limitations. While pharmaceutical SMEs show significant potential for international expansion, they face a triple constraint: limited financial resources, technological capabilities, and policy support. The book demonstrates how some SMEs have successfully overcome these barriers through innovation, strategic partnerships, and efficient use of available resources.

Based on these insights, the study proposes a comprehensive policy framework to support SME internationalization. Key recommendations include providing accessible low-cost financing, strengthening connections with research institutions, implementing SME-specific incentive structures, developing pharmaceutical clusters, and creating targeted training programs for global market entry.

This research offers valuable insights for policymakers, business leaders, and researchers interested in understanding and supporting the internationalization of small and medium enterprises in knowledge-intensive industries.