World Water Day: Leveraging PPPs offers a pathway to water-positivity, facilitating water resource development initiatives, which not only open avenues for accessing capital but also cultivate an environment conducive to innovation
Did you know industrial water usage accounts for up to 22 percent of global water consumption? This staggering statistic underscores the critical role of water as an essential input for day-to-day operations across industries. Among these, the pharmaceutical sector stands out, representing about 23 percent of global water usage.
As the demand for healthcare surges due to rising chronic illnesses and aging population worldwide, India anticipates a fourfold expansion to $200 billion by 2030. Yet, this expansion occurs amidst a looming water scarcity crisis. By 2030, India’s water demand is projected to double its available supply, posing a significant risk to the pharma industry. Therefore, it is increasingly imperative for the sector to integrate responsible innovsation in business practices to strengthen water conservation, mitigate economic ramifications, and bolster financial stability.
Tackling the Economic Impact of Water Crises in the Pharma Industry
The water crisis can potentially impact various facets of operations and supply chains, with far-reaching economic consequences. Here are some associated business risks and mitigation strategies that pharma players can explore to remain financially buoyant:
Operational risks: Water is crucial in the manufacturing of medicines and active pharmaceutical ingredients (APIs). The global water stress has evidently created a disjunct between the demand and supply of water, leading to substantial cost implications for the industry. Consequently, many state governments in India levy water tariffs on industrial water usage, with some increasing water tariff on manufacturing units by about 10 percent annually over the past decade. Such market risks inflate prices of pharmaceuticals, limiting patient access and exacerbating health issues. Addressing water scarcity is imperative, with companies increasingly exploring water footprint evaluations and alternative sources to sustain operations.
Pharma companies are implementing innovative practices like greywater reuse and recycling and AHU condensate recycling to achieve water circularity and reduce reliance on freshwater. Additionally, water risk assessments help identify high-stress areas for targeted water management.
Managing stakeholder expectations: It is becoming pivotal for pharmaceutical companies to adhere to Environmental, Social, and Governance (ESG) practices that align with the values of their stakeholders. However, implementing ESG compliance poses its own set of challenges, including the ever-changing landscape of ESG reporting and financial constraints.
Despite investors’ growing interest in businesses committed to address ESG concerns, they are wary of any potential negative impact on investment returns. According to a recent report, 49 percent of investors were unwilling to accept any reduction in returns resulting from the pursuit of ESG goals. Consequently, pharmaceutical players face mounting pressure to balance ESG initiatives and financial stability.
To balance ESG goals with financial stability and in alignment with Sustainable Development Goal 6, pharma companies are adopting cost-saving measures like Zero Liquid Discharge (ZLD) systems, which not only conserve water but also combat antimicrobial resistance, a global health risk, while optimizing operational costs.
It is also a cost-effective mechanism that involves wastewater treatment and recycling. Wastewater treatment can reduce water volumes by up to 98 percent, removing contaminants and making the water fit for reuse. It helps pharma players optimise water usage, reduce operating costs, and retain financial stability.
Navigating Water Sustainability with Patient-Centricity at the Forefront
Amidst global water crisis, pharma companies must uphold their commitment to patient-centricity by integrating sustainable practices into operations while remaining true to their purpose of ensuring access to lifesaving, cost-effective, and quality medications across all communities.
Leveraging public-private partnerships (PPPs) offer a pathway to water-positivity, facilitating water resource development initiatives. This not only opens avenues for accessing capital but also cultivates an environment conducive to innovation.
Furthermore, such collaborations pave the way for companies to expand their presence in emerging markets, thereby ensuring broader access to high-quality medications for a larger demographic and expanding market reach.
Undoubtedly, the future trajectory of the pharmaceutical industry hinges on its ability to navigate sustainability, risk mitigation, and patient-centricity, ensuring access to life-saving medications for all communities.
(Ramesh Swaminathan, Executive Director and Global CFO, Lupin Limited)