‘We are looking at a compound growth of about 35 per cent in the next three years’
Ettore Cucchetti, CEO, ACG Inspection, ACG Value Links, ACG Pharmagents, shares the future plans for his divisions, the focus areas for growth, changing market dynamics and more, in an exclusive interview with Lakshmipriya Nair
Tell us something about ACG’s history.
ACG as a group started around 56-57 years ago. We started as empty hard capsules manufacturers in India. Over time, the founders of the company ventured into the pharma machine industry, providing manufacturing, packaging and R&D technologies to pharma, OTC and dietary supplement industry. Realising global serialisation demands, ACG also developed advanced vision inspection systems to help detect faulty blister and carton packaging and a comprehensive range of Track and Trace solutions. Today, ACG Worldwide has a presence in over 100 countries with its products and services, employing approximately 3,500 members that strive to provide world-class technology across multiple domains.
However, capsules continue to represent the biggest chunk of our revenues. ACG Worldwide is the second biggest capsule manufacturer in the world producing more than 80 billion capsules annually. Apart from manufacturing facilities in India, we have big capsule manufacturing plants in Europe and Brazil. We have recently built manufacturing facilities in Indonesia and Thailand as well.
What are the future plans for each of the divisions you head.
I joined ACG India (ACGI) in 2015 and have been heading the three divisions since then (ACG Inspection Systems, ACG Pharmagents, ACG Value Links). For ACG Inspection, we have two areas of focus. First is inspection for OEM. This is to provide integrated inspection solutions for the machines provided by OEMs. We are already doing it in the Far East, we need to start doing it in Europe as well because there are many machine manufacturing companies who could use our services. We are also looking to build further technological relationships as we did with an Italian company for liquid inspection technology for one particular area of solutions based on induction sensors to assure penetration and a strong presence in the rapidly growing market for injectables, or to develop in-house technologies to serve this and other areas in which, for the time being, ACGI is not exposed.
The second area we are focussed on is providing track and trace solutions to pharma companies. This area has a huge potential due to changing regulations. We aim to provide track and trace solutions which can be integrated easily with the pharma companies’ existing manufacturing lines. Therefore, we are looking at offering track and trace solutions which are fast, accurate, reliable and cost effective.
Tell us about the cost advantage offered by ACGI to customers?
For us, offering cost advantage does not imply providing cheap or lesser quality products. For example, design is one of the areas where we give a lot of focus. It is a myth that aesthetics add to the cost. Whether you design an ugly machine or a good looking machine, both would entail the same cost. We have a group of designers who put in a lot of effort to create aesthetically appealing products at SciTech Centre. We believe in creating products which are not only efficient but are also good looking. Moreover, we have to continuously ramp up our engineering quality to face the European market.
Which are the areas in which you plan to invest, both in terms of geography and well as segments?
In terms of investing infrastructure, a lot of our local customers are moving their operations and manufacturing facilities from India and buying companies in areas like North America. We plan to replicate the same model or even create a better one to suit the customers’ requirements in different markets with different quality standards. We are setting up office in New Jersey, North America and set up a service, engineering and assembly point there. We also plan do the same in the European market.
As far as technology is concerned, we are looking at investing in long-term. We want to build technology that is futuristic, which will be beneficial to us and the industry in the next five to seven years. For instance, if we have to run a capsule blistering machine at 300 blister/ min now, we would like to make a machine which will run at 600 blister/ min. So, in future, when a need arises, our machine is ready to cater to it. Thus, it is combining R&D with engineering wisdom to prepare for the future.
We are, therefore, focussing on R&D considerably. Currently, around 12-15 per cent of our revenue is invested back in R&D. We are planning to increase this investment.
What is the growth that ACGI is chasing in the next three years?
We are looking at a compound growth of about 35 per cent. It is not without challenges. We need the people, the business and the financial means to sustain it, but I believe we are geared to achieve it.
So, is ACGI confident of achieving its targets even in the current volatile market conditions?
It is a good thing that the market is changing. We should prepare the team to be geared for the change. I would actually go on to say that as a technologically-driven company, we should be proactive and provoke the change. We need to drive the market and tell the customers what they need, thereby ushering change. We have the capability to do it, and I am optimistic that we will definitely achieve our targets.
What are the challenges that need to be overcome to continue your growth trajectory in the Indian market?
Experience is a big factor. The Indian industry needs to learn more about the machinations of the global market. The major difference between European companies and Indian players is experience. Europeans have over 200 years of industrial and engineering experience, exposure and sophistication in design. Balancing cost and quality would be a crucial challenge. The Japanese, Taiwanese and the Koreans have learnt to do this. The Chinese, to some measure, have followed suit. We need to learn it as well. We have to move from price – sensitive to technology – sensitive, because if you own the technology, you own the market. We also need to constantly evolve and innovate.
ACGI is planning to expand in Europe. Is Brexit going to be a problem to this?
Brexit is a challenge but it is also an opportunity. It offers opportunities to improve and we will probably ask someone to help us in dealing with this challenge effectively.
So, are you looking at M&As?
M&As is definitely one of our strategies. As mentioned earlier, one of them is the tie -up with an Italian company for liquid inspection technology. There are two more in the pipeline but I can’t share more details at the moment. But M&As come with their own challenges. The process has to be assessed thoroughly, and the integration has to be handled effectively keeping in mind the cultural differences and other factors. Fortunately, we have a very good team who can handle these things efficiently.
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