Regionalization Key to Avoid Disruption: ACG GroupBy Andrea Villar | Fri, 09/04/2020 - 10:00
Q: Which segments have performed best this year, and where does ACG Group (ACG) see the most growth in the coming years?
A: In recent years, ACG has been on a growth trajectory, and, partnered with a variety of new customers. We have had a sizable footprint in Mexico for quite some time, and understand that products are put through a lengthy approval process with COFEPRIS. In 2019, we positioned ourselves as the preferred supplier of integrated manufacturing solutions in the market – a strategy that resulted in impressive year over year growth. We are pleased with our current standing in the Mexico market, and expect a similar level of growth in the coming years, including an increased customer base. Many more capsule-based product manufacturers in Mexico now view ACG as a premium supplier, and we are in the process of integrating those accounts, many of which are multinational companies.
Many customers, especially in the pharmaceutical sector, are looking for supply chain risk mitigation, which means they are considering new suppliers that can meet the same requirements as their current supplier. We are the only capsule company that consistently increase capacity, build new plants and acquire new companies across the world. This persistent infrastructure investment is noticed by existing and potential customers alike.
Traditionally, our manufacturing base was in India, meaning we exported most of our capsules to Mexico from India. In 2020, we started using Brazil as a closer alternative, and look forward to this site becoming a major supplier to Mexico. We are already importing material from there and, once COVID-19 restrictions ease, , we’ll arrange site tours of our plants for current and prospective customers in Mexico and across Central and South America, so they can see our processes for themselves. We do not rule out the possibility of opening a manufacturing plant in Mexico in the coming years.
Q: How has ACG dealt with COVID-19’s impact?
A: COVID-19 has been an unprecedented challenge. Many of our facilities are in India, had a complete lockdown for almost two months, during which time our personnel could access neither our factories nor offices. Obtaining adequate raw materials from suppliers presented another obstacle.
Still, we persevered as best we could. We began holding daily calls to determine the best way of navigating various COVID-related issues. And while we certainly lost some capacity during the first few weeks, we were able to move forward quite well after squaring away the necessary documentation to resume production and business practices. After all, our services are essential – global health depends on pharma-relevant companies continuing to produce the materials used in medicines.
We now find ourselves in a better place than some other companies, whose supply chains were interrupted far more than ACG’s ever were, due to the pandemic. Currently, demand is soaring because companies are noticing that ACG has kept its facilities up and running through these hard times. Many customers are still experiencing their own challenges in dealing with COVID, but we are committed to doing our part by streamlining our supply chain to avoid disruption. Every member of the company, from our administrative offices to the production floor, is involved in making sure that if there is a problem, it is immediately addressed. All associates are empowered to make decisions for the company. In short: we are adapting to a difficult situation as effectively as possible, and we’re very proud of that.
We have been holding conversations with several consulting firms, like Deloitte and KPGM, and all of them agree that ACG has stepped up and taken crisis management to the next level, globally. In Mexico and Brazil, where the number of infections is still rising, we review the situation daily and take necessary actions.
Q: What is your perspective on stimulating national production versus importing products?
A: For many countries, stimulating domestic production would be a wise move once the COVID crisis subsides. This has, of course, transitionally been a challenge in the pharmaceutical industry, as many APIs are either from India or China, and that has led to disruption in the supply chain.
We are also concerned about this issue since we are based in the US and rely on supplies from India and Brazil. We are working on a solution to overcome this issue through a local facility. At present, we have a facility in Brazil. In the coming years, we will plan another facility. Manufacturing capsules requires a great deal of capital investment. It is also an art form of sorts, so people with the right skills are needed to manufacture superior product.
As soon as USMCA is enforced, trade between the US, Canada and Mexico will become for more expedient. Globally, there are 50 to 60 capsule manufacturers, and the top 3 are in the US. The gap between the leading players and all other companies is still huge in terms of technology, expertise, manufacturing capabilities, quality and buying capacity.