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India’s API industry faces high leadership talent churn: Report

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India’s Active Pharmaceutical Ingredient (API) industry is facing high churn in leadership talent amid a sharp increase in investments in the sector, according to WalkWater Talent Advisors.

Talent churn in manufacturing leadership is currently at about 40% and the trend is expected to continue, given the demand supply gap with the API industry attracting robust investments, the executive search firm said in a report on Thursday.

The leadership churn comes amid strategic consolidation in the API industry, driven by mergers and acquisitions (M&As) and private equity and venture capital (PE/VC) investments, leading to the emergence of several large PE-owned companies.

As manufacturing networks become more complex, top companies have beefed up hiring of senior professionals in leadership and strategic roles to manage their expanding manufacturing operations, said Rahul Shah, cofounder and director at WalkWater Talent Advisors. The survey covered 51 API companies and 120 candidates at leadership level in manufacturing roles.

India’s pharmaceutical industry is set to grow to $65 billion by 2024, with the API sector having a 35% share. Positioned as the world’s third-largest API producer, India supplies 57% of APIs listed on the WHO prequalified catalogue, showcasing its pivotal role in the global pharmaceutical market, according to the report.

The report projected the Indian API market to clock a 13.7% Compound Annual Growth Rate (CAGR) in the coming years. With a robust domestic market, advanced chemical industry, skilled workforce, stringent quality standards, and competitive operational costs (40% lower than in the West), India has become an attractive destination for investors.On educational background, the report said 95% of leadership talent in manufacturing roles are chemical engineers or chemistry graduates, with 41% holding full-time masters/doctorates.Andhra Pradesh and Telangana, Maharashtra, and Gujarat are the top three emerging talent clusters for the API industry, comprising over 82% of leadership talent. Shah said these clusters can be expected to attract a significant portion of future investments in the sector.

He said the industry is facing ageing leadership and there is a need for effective talent management strategies to groom younger leaders. Companies are extending the retirement age to cope with the shortage of leadership talent in the short term, he added.

High talent churn and demand supply gap is also spurring higher compensation levels in the API industry, said Shah.

“In the manufacturing function, compensation levels for leadership talent have increased in this industry and surprisingly the median CTC across levels are today comparable to CTC trends in the FMCG industry for similar talent,” said Prakash HS, vice president, pharma and Lifesciences at WalkWater Talent.

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