Warehousing in Pharma Industry and its Investment Benefits
As per the Economic Times, a total of INR 495 billion is expected to be invested in the warehousing sector by 2021. This, even in the face of the ongoing pandemic of 2020. Which begs the question – Why is warehousing picking up pace, when pharma and healthcare should be the ones showing the growth?
When you order something online, does that item drop out of the skies directly onto your lap? That very statement might make you laugh. If anyone knows even a bit about how businesses and organizations work, it will be no surprise for them regarding the importance of storage and warehouses in the demand and supply cycle. With the pharmaceuticals industry, the need for warehousing is as important as it is for any other business.
The pharmaceuticals industry is primarily divided into two kinds – one which manufactures equipment and the other that manufactures compounds or drugs. From both angles, storage of components and/or ingredients is of topmost priority. For drugs, compounds need to be stored in temperature-controlled spaces to avoid any kind of contamination or deterioration. Healthcare is closely connected to the pharma industry and as a result, demand for testing and production equipment is always on the rise. Considering the COVID-19 situation, it does seem like the pandemic might be here for a long time. While companies across the globe are in a race for developing effective test kits and a probable cure, there are other diseases and ailments around that also need attention. This makes the growth of the pharmaceutical industry a given positive. As per IBEF, the Indian pharmaceutical sector is expected to grow to US$ 100 billion and the medical device market is expected to grow US$ 25 billion by 2025.
Combined, the scale of operations of pharmaceuticals and warehousing presents a formidable investment opportunity. Life as we used to know is not anywhere close to becoming normal again. However, avenues of wealth creation have opened regarding commercial real estate. Warehouses specific to pharmaceutical use are mostly concentrated in northern India as per JLL. While there are sizable options available in warehousing in the south, the functionality of cold storage facilities is still low. Considering the growth potential of pharma-centric warehouses in the very near future, it is imperative that investors recognize the practical ramifications of the pandemic situation and how the market is going to change due to the same.
Speaking only of cold chain markets, the Indian cold chain market was worth INR 952 Billion in 2017. As per a report by Research and Markets, this market is further projected to reach INR 2,293 Billion by 2023, at a CAGR of 15.4% during 2018-2023. Out of the available cold storage space in India, almost 25% is used for storing high value commodities – including primarily medicines and drugs.
If you are reading about all the prospective growth pharma warehousing can provide you, you might be wondering where it would all be available in the most transparent manner. At Strata, we have opted to take the path less taken. We offer investment in Commercial Real Estate via ‘fractional ownership’. This applies to all properties listed on our platform. For every property, you can know the projected growth and the minimum investment required. Interested in knowing more? Head on over to Strata and let one of our expert Investment Managers tell you all about it in detail.