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.”
(This story appears in the 24 April, 2020 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)