Following PM Modi’s vision of ‘zero defect’, ‘zero effect’, pharmaceutical companies supported the Swachh Bharat campaign. The government too is helping small-to-medium sized companies attain this objective through the cluster model but they need more enabling policies to toe the line. By Usha Sharma
One of Prime Minister Modi’s mantras at the 2014 Independence Day Parade was: zero defect, zero effect. He said that India can become a big exporter if it does not compromise on two things: “No defects in manufacturing items and zero effect on our environment.”. Thus the ‘Make in India’ and ‘Clean India’ campaign have put pressure on pharmaceutical companies in India to clean up their act.
The pharma sector is one of the most polluting sectors which produces heavy bio-waste. The cost of treating this waste is also expensive and adds to the capital investment in the drug development and manufacturing process. The Indian pharma industry is very fragmented, dominated by MNC pharma, big Indian companies as well as medium to small-sized enterprises. 250 of the largest companies account for 70 per cent of the Indian market. In this competitive market big pharma companies outsource their products to small-to-medium pharma players to cut labour and production costs. Companies in the MSME bracket find it extremely difficult to comply with many of the regulatory requirements as this entails hefty investment.
For example, having an effective effluent treatment plant (ETP) is mandatory for any pharma munufacturing unit in order to treat waste material generated during production. This entails a sizable capital investment. Often small pharma manufacturing companies do not have the enough financial backing nor the land for fulfilling these requirements.
Nitin Kalothia, Director, Manufacturing & Process Consulting, Frost & Sullivan highlights, “The focus is shifting to investing into renewable energy and usage of clean fuels (briquette based boilers, gas based DG sets, etc) and waste recycling. Since water is a major resource for many pharma companies, tracking consumption, reduction and recycling have been well adopted by them. Treated water is used in non-manufacturing areas.”
The situation is compounded by the fact that each company’s compliance needs will depend on their product range. As a Glenmark spokesperson says, “Raw effluent from a formulation plant is relatively easier to handle and can be treated effectively using conventional ETPs. The typical conventional ETPs consists of oil and grease trap, equalisation tank, primary (i.e. physico-chemical) treatment, biological (i.e. aeration tank followed by secondary clarifier) treatment, pressure sand filtration, activated carbon filtration and disinfection. These ETPs are relatively easy to install and operate and can be maintained by formulation plants irrespective of the size / capacity of the manufacturing units.”
Similarly raw effluent from bulk drug units can be categorised either as high chemical oxygen demand (COD) and high total dissolved solids (TDS) or low COD and low TDS. Each category requires different treatment processes. Both these streams of effluent are much more complex and difficult to treat as compared with effluents of formulation plants.
Though available, treatment of high COD and high TDS effluents but calls for higher capital investments and revenue budgets. “The technology is a combination of a stripper, Multi Effect Evaporator (MEE), multiple Reverse Osmosis (RO) units and Agitated Thin Film Drier (ATFD). Part of the output from MEE further requires to be treated along with low COD and low TDS stream using conventions ETP. Additionally, skilled manpower is required to operate this technology,” informs the Glenmark spokesperson.
Clustering for comfort
Realising that MSME pharma companies do not have the required financial backing, the government has introduced a cluster model approach, wherein groups of pharma companies can share common facilities. While commenting on the cluster model and the benefits to pharma companies the Glenmark spokesperson comments, “The cluster approach will reduce the cost of treatment and ensure that controls are effective (leading to) better protection of the environment as compared to individual units. At the same time, treated effluent shall be recycled/ reused to the maximum extent possible.”
But are pharma clusters delivering the desired results? As Debabrata Gupta, Chief Operating Officer, USV puts it, “Pharma clusters are an important part of the solution. There are many such clusters – notably in Andhra Pradesh – which are operating very well and in a compliant manner. These are often run by private agencies, who in turn do a very good job of environment control. Since the operators charge the industries, based on volume as well as quality of effluent, this serves as a incentive for the industry to generate less effluent – both in terms of volume and quality of contaminants.”
The efficiency of a cluster model would obviously depend on the thought and planning that goes into it. Pointing out the technical aspects which pharma companies need to understand, H Subramaniam, Chief Operating Officer, EverythingAboutWater mentions, “In a cluster-based ETP system for the pharma industry, it is essential to ensure that online real-time effluent monitoring systems are installed to ensure that the individual units follow the prescribed norm. The treatment plant also needs to be designed for shock loads and must handle a high COD level. Recovery of certain chemical streams is possible from the effluent through physic-chemical processes, which can be used back in the process or sold in the market. This builds the concept of pZLD (profit from zero liquid discharge) and improves the viability of the whole project. It also reduces the quantity of the sludge coming out of the unit, thereby reducing the disposal costs.”
Complexities galore
In addition, new guidelines have put additional burden on manufacturers. As the Glenmark spokersperson points out, “The recent guidelines by the Central Pollution Control Board (CPCB) asking State Pollution Control Boards (SPCBs) to have online monitoring stations installed at such ETPs have escalated costs further. In short, this technology is costly and difficult to maintain and hence not an easy choice for smaller units. In this situation, financially common ETPs and bulk drug clusters is a better choice,” he points out.
ETPs can have the best technology but at the end of the day, they also need skilled manpower to run this technology in the right manner. Subramaniam opines, “Training of operators is essential to ensure that the plant is well maintained and continues to perform over the life cycle. The government should support such initiatives, to make it viable for small and medium pharma industries to reduce their environmental load and to also reduce their total water consumption. ”
Identifying the avenues
It is a matter of record that India was possibly one of the earliest adopters of the Export Processing Zones (EPZs) model when the government set up Asia’s first EPZ at Kandla in 1965. The Department of Industrial Policy and Promotion (DIPP) followed this up in April 2000 with the Special Economic Zones (SEZs) policy aimed at solving issues related to multiple controls and clearances, the absence of world-class infrastructure, and an unstable fiscal regime as well as to attract larger foreign investments in the country. Later, under the new excise policy in the year 2004, Central Excise Duty on pharma products which was levied on MRP created a compulsion for many small and big pharma companies in the country to relocate their business to excise free zones. Seizing the opportunity, many pharma companies opted to move these zones and started acquiring land in excise free zones.
However once the terms of the tax incentives expired, these companies started moving away leaving behind sick units. Pharma companies started exploring other options for growth.
As the Glenmark spokesperson rationalises , “Formulation units operating in excise free zone lose profitability once the tax incentives are over. Having shared facilities like ETP and Common Hazardous Waste Treatment Storage and Disposal Facility (CHWTSDF) may not be enough for companies to close factories and move to other locations where tax benefits are available. Such units may have to explore other options or new markets or product portfolios or export options through which the sales revenue may be improved for their sustainability.”
“Such units may have to explore other options or new markets or product portfolios or export options through which the sales revenue may be improved for their sustainability. The principles of sustainability should be implemented in all three dimensions i.e. economic, environment and social. A broader approach towards sustainability of such units is the key rather than only looking at having common facilities,” he avers.
So should state governments help provide other shared facilities like ETPs to prevent pharma companies moving away? Gupta opines, ”There are examples on both ends of the spectrum. While companies do set up units in the tax free zones to avail of the tax benefits, a majority of them do continue operations even when the tax incentives have lapsed. This is because there is a manufacturing capacity which has been created and shutting down of a unit will actually have a negative impact on the supplies and therefore, on the business.”
Push from the government
Recently, a 45 member delegation comprised of CEOs, senior industry leaders and members of the FICCI Secretariat led by Harshavardhan Neotia, senior vice president, FICCI, and companies mainly from the renewable energy sector and in the urban development space, traveled along with PM Modi to participate in the Hannover Messe fair. This is in sync with the importance being given by the NDA government to the development of clean energy and sustainable development of cities with a focus on water, transport and waste management. Biotechnology was one of the potential areas of cooperation between India and Germany, the others being manufacturing, infrastructure, IT, ITeS, auto components, green technology, entertainment and vocational education and training.
During five-day event, the members of the delegation reportedly attended a seminar organised by FICCI on renewable energy in partnership with the Ministry of Renewable Energy, Government of India as well as one on urban development in partnership with the Ministry of Urban Development, Government of India, along with the respective ministries of the German government.
Highlights of companies following green practices
- They have a structured programme in place (result driven and time bound) to identify and eliminate environmental impacts and eliminate potential risks. These projects are driven by an identified team and there is review mechanism in place.
- The major focus area in environment is towards energy, water and waste management. Energy conservation has been the first stepping stone for most companies since energy cost is significant for them, followed by effective disposal of hazardous waste. Slowly, the focus is shifting to investing into renewable energy and usage of clean fuels (briquette based boilers, gas based DG sets, etc) and waste recycling. Since water is a major resource for many pharma companies, tracking consumption, reduction and recycling have been well adopted by them (Treated water is used in non-manufacturing areas).
- Companies are identifying and working with experts on alternate ways of testing the efficacy and effectiveness of drugs at the drug discovery stage and to eliminate / reduce clinical trials on various live species.
- As the pharma sector being driven by regulatory bodies, it requires volumes of documentation. As a green drive, few companies are looking at the ‘paperless factory’ concept by online documentation and control (though after due approvals from regulatory bodies).
(Source: Frost & Sulivan)
The government is constantly trying to emphasise the need to reduce the burden on the environment and encourage industries to use renewable, green material. Recently, Dr Harsh Vardhan, Union Minister for Science and Technology, urged scientists and technologists to working on developing low cost building and structural materials to use renewable, green material for construction.
The construction materials which are currently used in pharma manufacturing facilities conventionally use plastic and steel. Pre-fabricated materials have also found their way into the pharma construction business. However, as rightly pointed out, Gupta admits, “There are not too many options available at this point in time, for usage of environmentally friendly or recyclable materials for construction. Unless these technologies are developed, it will be difficult to assess their suitability for construction.
Rewards and recognition
There is an urgent need to encourage and incentivise pharma companies to adopt an environment friendly approach. Rewards and awards are a time honoured way to do this. For instance, Frost & Sulivan’s Green Manufacturing Excellence Awards recognise companies across sectors, including pharma, who have adopted a green/ sustainability approach. As Kalothia comments, “The sustainability initiative in the country at large is a selective choice and a handful of big corporates are working on it. Few pharma companies, mainly the leaders in this sector, have also been a part of this journey and are driving sustainable development practices in their organisation.”
So are pharma companies in India finally matching up to global standards? Analysing the trends, Kalothia says, “Not mentioning pharma companies in particular, but at an overall level, since the focus on green practices in India has been quite new (about a decade old) compared to few developed nations where the journey started much earlier, we have a long way to go to catch up with them. Also, the environmental laws in developed nations are much more stringent compared to India which is driving.”
But there are signs that more pharma companies are slowly realising the benefits of ‘going green’. According to Kalothia, “Representation of pharma companies in Green Manufacturing Excellence Awards is this year in the range of 10-12 per cent of the total applications as against five to seven per cent in the previous editions. These are mainly represented by large and medium pharma companies in the country.”
Here’s hoping that many more follow these leaders in the years to come
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