Market Movers: Lessons from a Frontier of Innovation - IFC

28Market MoversConclusionaiming for the topThere is pressure on health-carecosts in all economies, and thatlooks set to carry on pushingdrug prices down. And there isincreasing demand for faster andmore frequent new products asexisting drugs come off patent andbecome generic. In that challengingenvironment, Jubilant is hopingfor continued rapid growth, basedon its relatively low (though rising)cost base and its ability to retainhighly qualified scientists.It is Jubilant’s aim to be amongthe top three in the world in allits major markets. The company isclose to being the second largestproducer of pyridine 17 and itsderivatives globally, cateringto leading pharmaceutical andagrochemical companies. Givenits strong customer relationshipsand its proven reliability, Jubilantexpects to be the market leaderin the near future. In the marketfor solid polyvinyl it is third in theworld – with 75% of its productionexported, mostly for chewing gumto firms like Wrigley and Cadbury.It holds a similar position in themarket for latex additives to tyres,and it is the world’s second largestproducer of carbamazepine. Thecompany acknowledges, however,that increasing globalisation andinternational competition aregoing to require it to compete withmultinationals not only financially,but right across the triple bottomline of economic, social andenvironmental performance.Increasing globalisation and international competition are going torequire Jubilant to compete with multinationals not only financially,but right across the triple bottom line of economic, social andenvironmental performance.To continue to build its internationalpresence will require morecross-border takeovers – and thepositive image created by Jubilant’ssustainability reporting and itsEHS activities help in making suchmoves. They also help in recruitingand retaining the top-notch scientiststhat are so vital to the company’sfuture.As the company continues togrow and expand internationally,the scrutiny of its activities willalmost certainly increase. Stricterenvironmental regulations arelikely in future, including the EU’snew REACH legislation, 18 whichhas recently come into force.Jubilant is well aware of thesechallenges and knows it will needto innovate constantly to meetnew requirements. As a fullyfledged member of the globalpharmaceuticals community,Jubilant will also have to addresssome of the most advanced andvexing issues facing the industry, inthe areas of bioethics and the useof new technologies in research anddevelopment.BOx 6: INTEGRATIONJubilant’s business model isbuilt on its ability to providehigh value-added specialitychemicals and quality researchand development services toclients in a cost-effective manner.Yet cost-competitivenessis a challenge in India wherecosts are higher than in countrieslike China and whereenvironmental regulation isbecoming more stringent.However, Jubilant has succeededin integrating management ofenvironmental issues throughoutits operations and therebyreducing costs. Effluent treatmentcosts, for example, arebuilt directly into productdevelopment costs. The companyhas also chosen to usemolasses – abundantly availablein India as a by-product of sugarproduction – as its chemical feedstock.Molasses has less cost andsupply volatility than the crudeoil-based feedstocks used byinternational competitors, andis also more environmentallyfriendly.Jubilant reuses wastes,converting some to biogas –saving the company money bymeeting its energy needs inplace of coal. Jubilant also usesbiodegradable effluents forcrop irrigation, which it suppliesto the surrounding communitiesfor free, helping buildgood relations and reduceoperating risks.17Pyridine is a basic organic chemical, a building block and solvent in agrochemical, pharmaceutical and other industries.18REACH is the European Union legislation on the Registration, Evaluation and Authorisation of Chemicals. It is intended to standardise the way chemical substancesare evaluated for impacts on health and environment, and affects chemicals that are manufactured or imported into the EU in quantities of greater than 1 tonne.