Value Migration
Capture and Win
Value migration - flow of economic and shareholder value away from obsolete business models to new
Adrian Slywotzky
Adrian Slywotzky's book Value Migration: How to Think Several Moves Ahead of the Competition highlight that there are 4 Key Drivers of Value Migration:
Customer Needs: Shifts in what customers value (e.g., cost, quality, convenience).
Business Design: How a company structures itself to deliver value.
Technological Innovation: New technologies that enable better solutions.
Policy and Regulation: External forces that shape market opportunities
The 2021 revision of Schedule M underlines India's commitment to becoming a global leader in pharmaceutical manufacturing. I think it may be catalyst of tremendous value migration from unorganised to organised players
How Big is the landscape?
Currently I understand that the backend of WHO GMP infrastructure, so there are close to 10,000 Pharma Contract Manufacturing companies in India and most of them, more than 90% I believe are not WHO GMP compliant
Everyone has to comply
The revised Schedule M under the Drugs and Cosmetics Rules, 1945, in India has specified different compliance timelines based on the size of the manufacturing companies:
Small and Medium Manufacturers (those with an annual turnover of less than ₹250 crore): They have 12 months to comply with the new regulations from the date of publication of the revised rules.
Large Manufacturers (those with an annual turnover exceeding ₹250 crore): They are given 6 months to implement the changes following the publication of the revised Schedule M.
This creates a clear divide:
Survivors: Companies willing to invest in quality and adapt to the new norms.
Casualties: Small, underfunded players who can’t meet the upgraded standards.
In this post I have collated management commentary from concalls to capture how is this migration is playing out and which companies you should dig deeper
