Is hand sanitiser production in safe hands?

Hand sanitiser makers—old and new, big and small—have seen demand go through the roof. The flip side: Access to raw material and labour has proved a challenge

By Naini Thaker, Forbes India Staff

Published: Apr 13, 2020 02:16:28 PM IST

Updated: Apr 13, 2020 02:40:47 PM IST

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Is hand sanitiser production in safe hands?

Image: Vinay Gupta

This is part 1 of a series in which Forbes India speaks to sanitiser manufacturers—large and small, old and new—across India to find out how they’re coping with changed business models and rising demand due to the coronavirus pandemic.

A joke doing the rounds—humour has proved to be the much-needed release and relief during a nationwide lockdown—is that distilleries have never been busier at a time when every Indian state has reckoned that liquor is a non-essential item. That alcohol is, of course, being directed towards an item that’s never been as essential as it is now in the time of coronavirus.

According to a March 26 release from the Ministry of Consumer Affairs, Food and Public Distribution, some 45 distilleries have been granted permission to produce hand sanitisers. This is in addition to 564 other manufacturers who got the go-ahead. Besides even local schools and educational institutions like the IITs have started making their own do-it-yourself hand sanitisers.

One critical requirement for these manufacturers—old as well as new—is that they have to meet the WHO-mandated norms: If they’re using ethanol, the alcohol content has to be 80 percent, and 75 percent if it’s isopropyl alcohol (IPA). Anything less than that and the sanitiser is ineffective. And, not just in India but globally, ‘fake’ hand sanitisers are proving to be a scourge. “The FDA, police and local self-governing bodies would need to keep doing regular checks on the newly licensed hand sanitiser manufacturers, particularly on the manufacturing practices being followed,” says Charu Sehgal, Partner and Leader, Lifesciences and Healthcare, Deloitte India.

The hand sanitiser industry, estimated to be worth ₹40-60 crore before the Coronavirus outbreak, is expected to grow to ₹300-400 crore by the end of this year, and cross $2 billion (over ₹15,000 crore) by 2025, project the makers of PeeSafe, a sanitation and personal care brand. Adds Sehgal: “The demand for sanitisers may never reach the current level again but there definitely would be an increase of 10-15 percent (once the pandemic blows over) simply because of increased awareness and exposure to this product.”

However, coping with the rising demand has been tough, given that most consumers have been panic-buying. Their main concerns, be it a large FMCG company or a small player, are the same: Non-availability of labour and raw material, courtesy the lockdown.

IPA, one of the main raw materials, is either too expensive for small players or is in limited supply. As an alternative, the government of India has asked the country's sugar industry as well as the distilleries to prioritise supply of ethyl alcohol, ENA (extra neutral alcohol) and ethanol, by-products in sugar manufacturing and used in making liquor. These raw materials have been brought under the Essential Commodities Act.

The good news for hand sanitiser makers is clearly the demand, although the challenge is to keep up with it. Forbes India speaks to six sanitiser manufacturers—large and small, old and new—across India to find out how they’re coping.

Ken Biotec: New Prescription

In 2009 Kanubhai Patel, a pharmacist who had been working as a general manager for a large pharma company for over a decade, decided to take the plunge and set up his own company.

He called it Ken Biotec, which, in August 2019 went on to become a manufacturer of antibiotics, analgesics, antacids, and cosmetics, among a host of other products. In mid-March this year, he added a new segment: Sanitisers, under the brand Fraizy. By the end of the month he had sold 50,000 units.

“We were in a situation of panic when we started manufacturing,” recalls Patel. For a small-scale player like him, with an annual turnover of ₹1.5 crore, cost was the biggest challenge.

As a regular buyer of packaging products and IPA, Patel worked out a cost for sanitisers assuming the regular prices for raw materials.

Patel was a procurer of IPA for formulations like his regular cosmetic products including moisturising creams and lotions. “I took orders from our usual clients, at the usual costs. Once we started procuring the raw materials, we were shocked. One cap for a bottle that was sold at ₹1 per piece, was being sold at ₹5 per piece,” says Patel. “I did not anticipate such price hikes!”

For a player like Ken Biotec to absorb such costs was not easy. A replacement for IPA is ethanol, but Patel would have to get another licence to use ethanol. “Even if we got the licence, the cost of packaging was too high anyway,” he says.

Patel hopes to stay with sanitisers for the long haul. For now, though, he has a problem. “We have no stocks of raw material or manpower to manufacture any more.”

The long-term tech effects of Covid-19, and offices of the future

Three IIM professors assess the first, second and third-order implications of the lockdown, which has forced companies to go digital. Many of these effects could be lasting, and change the way we live

Rahul De’, Neena Pandey, Abhipsa Pal

With the steady continuity in the global Covid-19 pandemic, we are advised to maintain social distancing, keeping safe, physical distance from other people, in order to reduce the risk of the coronavirus transmission. To ensure this, the primary measure taken by organisations is the work-from-home mandate.

All forms of office work has now shifted, almost all over the globe, to the digital space, wherever possible. Schools, colleges, universities and training institutes are all also shifting instruction and examinations to the audio or video conferencing mode. Family members stranded in disparate locations are resorting to conversations over video.

As we shift to the digital embrace and adopt it in increasing measure, we are slowly segueing into habits that are likely to remain with us beyond the pandemic. It is well known in academic research that ways of life associated with technology take time to evolve, and often shift in unintended and unanticipated directions. This has to do with the technology itself, the functions and features in it and with how we change ourselves and our lives to adapt to these new ways.

The changes that technology has are often understood as first, second and third-order effects. First order effects are immediate and satisfy the need for which we adopted the technology; second order effects appear later, and have to do with changes within our work and everyday habits; and third order changes appear much later, where entire firms appear, or disappear, and industries and social practices change owing to our new preferences and habits. One can argue that first order changes are anticipated and desired, while second and third order changes may include unexpected and unintended positive or negative consequences.

We attempt, in this article, to understand some of the order changes that we can expect during and after the Covid-19 pandemic.

As the pandemic forces us to use audio and video teleconferencing, a direct first-order effect will be that organisations will enhance their capacities in terms of hardware, software and networks to manage this increased demand. The service providers, those who provide 3G, 4G and later 5G services, will also gear up and prepare to provide increased bandwidth. It is likely that in a few months, which will be the second order effect, organisations will increasingly adopt remote conferencing as a routine way of working, with all forms of meetings and discussions moving online, unless an exception exists.

The entire ecosystem of digital providers and support industries will then gear up to meet this demand. New forms of cloud-based services, apps and firms that manage such services, will emerge. A host of startups will offer meetings with better security, privacy controls, easier integration with organisational workflows, and easier access by different types of users in different countries.

The third order, more longer-term effects of this digital move, will be more interesting and possibly revolutionary. We speculate on a few, restricting our comments to urban workspaces:

· We expect that working people will get so used to the digital means of meeting and having discussions that the idea of going to office to work will become quaint. Those who will need to meet face-to-face will be a select few, possibly those who have to engage with physical things in the office space, or senior personnel who want to sit across from employees. Most others will interact only through technology.

· In traditional office spaces, work often includes discussions with teammates and lending a hand to colleagues during routine work. As the workforce shifts to the work-from-home culture, the concept of teammates will be reformed, with a distinct share of modular work, as received from the ‘team leader’. The community team culture may fade away.

· We expect that in India, the need for IT professionals who can operate new cloud-based and internet-based infrastructures will grow, and skills needed for these will also grow. Indian IT services firms will then extend these skills all over the globe.

· Along with the convenience of work-from-home will arise, on the dark side, a permanently-at-work culture. The need of having to respond to a boss at all times, and all hours, will mean no demarcation between personal and professional life. The rise of IT in the workspace, in general, has already provided a basis for this phenomenon, and it is likely to grow immensely in future. Just as the eight-hour work day was demanded by workers of the Industrial revolution, it is likely that the worker-at-home of future will also demand laws restricting and normalising the work-life balance.

· The need for dashing off to different cities for meetings will also decline. As managers, executives and government officers become used to the digital space, the old grind of rushing to Delhi for a 45-minute meeting (and spending 12 hours on the journey from Bengaluru, as one of us has experienced), will disappear. This will entail a decline in demand for commercial travel.

· The need for office spaces, office buildings, and office equipment will also decline. Much will shift to the personal space—inside homes or in common, shared neighbourhood offices. This will also lead to reduced commuting and need for transportation facilities, leading to fewer traffic jams in urban areas. For a city like Bengaluru, which recently emerged as the worst city for losing time in traffic, this may come as a breather. Over the very long term, reduction in fossil-fuel based travel and urban congestion will have a positive impact on the air quality, energy consumption and overall environment of cities.

· As we begin to basically work from home, there will be a resurgence in the presence of women in the white-collar workforce. Where once women used to withdraw from professional offices to balance home and work lives, the new order will see an increase in their continued presence. We think this will be a positive game-changer for society.

· We do see this also as an advantage for firms that were historically well-equipped with work-from-home digital infrastructure. For those that did not have this infrastructure in place, such as small and medium size firms, the expenses for digitising their workforces may be expensive and hence a disadvantage.

The post-pandemic future could therefore hold both positive and negative consequences. For many of us, this will mean changes that we will have to accept and adjust to.

(Rahul De' teaches Information Systems and Artificial Intelligence at IIM Bangalore. His research focus is on information technologies for development.

Neena Pandey teaches Leading Digital Transformations at IIM Visakhapatnam. Her research focus is on the policy aspects of Internet governance.

Abhipsa Pal is a faculty member in the Information Technology and Systems area at IIM Kozhikode and holds a PhD from IIM Bangalore. Her research focus is on digital payments and information technologies for development)