For decades, India’s pharmaceutical success story has been told through the lens of drug manufacturers, biotechnology breakthroughs, and healthcare innovation. Yet beneath every regulated manufacturing plant, every sterile facility, and every life saving medicine lies an industry that rarely makes headlines, the engineers, equipment manufacturers, cleanroom specialists, and technology companies that make pharmaceutical manufacturing possible.
Alanar One believes this overlooked ecosystem is one of the most compelling investment opportunities in Indian manufacturing today.
In this conversation, Mr. Aamer Khan, Fund Manager at Alanar Capital, shares why the fund has chosen to focus on pharma engineering at a time when institutional capital is beginning to recognise the sector’s strategic importance. From identifying hidden value in founder led businesses to building companies that can attract global strategic buyers, he discusses the philosophy behind the fund, the lessons from successful exits, and why India’s next wave of industrial growth could emerge from the businesses working quietly behind the scenes.
The discussion goes beyond capital. It explores conviction, founder partnerships, operational excellence, and the long term transformation of a sector that has remained indispensable, yet largely invisible, in India’s healthcare journey.
Alanar’s fund deck mentions pharma engineering as the “invisible iceberg” beneath India’s pharma, biotech, and healthcare boom. Every overlooked sector eventually gets discovered. What convinced you that this is the right moment, and not three years ago or three years from now?
Icebergs don’t announce themselves, they wait for someone to stop staring at the tip. Pharma engineering has been the least-covered, most-relied-upon layer of Indian healthcare for as long as the sector has existed: the backbone under a pharma market heading to $450 billion by 2047, a $610-billion healthcare economy by 2026, and a $300-billion bioeconomy by 2030, and, by our own search, still without a single serious market report to its name. That’s not an oversight. That’s the whole foundation missing from the blueprint.
Follow the money and the mispricing finds itself: healthcare’s share of Indian PE/VC nearly tripled, 6% in 2021 to 17% by H1 2024, the steepest climb of any sector, and almost none of it reached the engineering layer every one of those cheques quietly rests on. Demand didn’t wait for the memo either: Sai Life Sciences alone has put over ₹2,000 crore into capex since FY20.
So why not three years ago, or three years from now? Three years ago the mindset hadn’t turned yet. Three years from now, the capital will have caught up, and taken the discount with it. We invest in the gap between the two: the window where conviction is cheap and consensus hasn’t shown up to price it correctly.
Fragmentation cuts both ways. It creates consolidation opportunities, but it also produces a long tail of companies that may never reach institutional readiness. How do you separate genuine roll-up candidates from businesses that are simply small for structural reasons?
We don’t read the pitch deck, we read the plant floor, because we’ve run plant floors ourselves. The line between a roll-up candidate and a company that’s small for a reason isn’t scale. It’s qualification.
Large pharma buyers increasingly award work on execution capability and manufacturing track record, not the lowest number on the page.
A firm with real engineering depth and an order book capped only by its balance sheet, that’s a business capital and structure can unlock. A firm competing on price because its systems buckle past a certain size, that’s a business no cheque fixes, because you can’t buy a capability that was never built.
The scale of the miss tells the real story: India is the world’s third-largest drug producer and holds barely 3.8% of the global cleanroom-in-healthcare market. Most of the base is genuinely under-built, not genuinely small.
So the discipline is telling under-resourced apart from outmatched. We’ve built businesses like these from the ground up. We know the difference the moment we walk the floor.
You describe “promoter fear” as a defining barrier in this segment. Promoters guard equity everywhere. What is specifically different about this cohort, and what have you actually said in a room that changed a founder’s mind on dilution?
Every promoter guards equity. This cohort guards something more specific, a company built by hand, on internal accruals and working-capital lines, that has never once answered to outside money. Their fear isn’t dilution. It’s being rewritten by someone who’s never held a wrench.
We tell them the opposite, and it lands, because we’ve sat exactly where they’re sitting.
Our model of capital is the Prince Rupert’s Drop, nearly unbreakable at its core because the strength is structural, and it shatters the instant someone disturbs it carelessly at the tail. A business behaves the same way. Our job is to reinforce the structure and remove the stress points, not redesign the founder or the operating DNA that got them here. From a financier, that’s a pitch line. From operators who have built, listed and exited companies in this exact segment, it’s a résumé, and it’s the résumé, not the term sheet, that actually moves a promoter.
The clearest one was a family-run blister-packaging machinery maker in Ahmedabad, a business built over two decades by people who knew their machines cold. The founder was insisting we value the company, at the very floor, off the industrial land sitting on its books. I told him plainly: if we wanted land, we’d go and buy land, we don’t need him for that. What we couldn’t buy anywhere was the capability he’d spent twenty years building. We were there to capitalise the capability, not the plot under it. That was the turn, the moment he stopped defending the real estate and started defending the engineering he’d actually created.
Founders here reach for land because land is the only value they’ve ever been taught to trust. The work is getting them to see that the more valuable asset is the one they’d stopped noticing.
The TSA to Thermax transaction anchors your credibility story. What was true about that company at entry that the market had not yet priced in, and how much of the 26x was thesis versus timing?
TSA never came off a screen. It came from inside the ecosystem, which is exactly how we saw what the market had mispriced. On paper it read as a niche high-purity water and process-equipment fabricator. What that missed: water-for-injection and ultra-pure systems are the one capability a regulated facility can never compromise on, and TSA had already earned the right to supply it, over 500 installations, ₹120 crore of revenue, roughly ₹11 crore PAT in FY23.
We spent years reinforcing what was already there, not reinventing it. Thermax acquired 51% in early 2024 and took the balance over two years, at a valuation that returned us 26x. Thesis or timing? The thesis, that purity capability would eventually consolidate under a strategic, was structural and ours from entry, and the same logic is visible today all the way up to billion-dollar CDMO mergers like Suven–Cohance. Timing simply picked the year. The ecosystem is what let us find the company early and build it to the point a global player had to own it.
Capital allocation sits at 51% pharma engineering, 45% broader healthcare and biotech, and 4% gene therapy and regenerative medicine. The 4% sleeve is unusual for a first fund this size. Is that a learning allocation, a signaling allocation, or one you genuinely expect to contribute to returns?
India’s bioeconomy went from roughly $10 billion in 2014 to $165 billion in 2024, aimed at $300 billion by 2030, and cell-and-gene sits at the very front of that curve. It earns its place in a pharma-engineering fund for one reason: advanced-therapy manufacturing demands the most extreme engineering that exists, ISO Class 1–3 cleanrooms that can cost twenty times a standard room per square foot, with air-change rates above 600 an hour.
Even the GLP-1 wave everyone is chasing, projected at $140 billion in sales by 2030, ultimately converts into demand for the sterile fill-finish infrastructure our segment builds. We’re not making a side bet on biology, we’re investing in the engine, and this happens to be its most advanced application. If a name compounds, it adds to returns. If it doesn’t, we’ve still bought a well-priced option on where our core demand is heading regardless.
Pharma engineering deals tend to mature slowly, and exits depend on strategic buyers or IPO windows that are not always open. How do you reconcile the 8+2 fund tenure with the actual liquidity rhythm of this sector?
Two things reconcile it. We invest at growth stage, in companies that have already proven relevance, funding a disciplined scale-up, not seeding a decade-long bet. And the exit channel isn’t hypothetical, it’s open and active right now: strategics are consolidating this space, from TSA-to-Thermax to billion-dollar CDMO mergers, with global PE platforms, Advent, Carlyle, PAG, assembling assets across the value chain. That is exactly what an 8+2 structure is built to harvest.
It’s operational harvesting: capacity built over the last two years maturing into utilisation and revenue, which is the window in which strategics pay up. We don’t optimise for early exits, we hold long enough for systems to compound. And we don’t need an IPO window to open on cue either. A strategic buyer who wants qualified capability is a more reliable exit than a market, and that buyer already exists and is already paying.
The ISLE framework reads cleanly on your thesis. In practice, “Lock-in” secures the founder’s financial position before further scaling. Many growth investors do the opposite and deliberately keep founders hungry. What is the logic behind your approach, and have you seen it backfire?
Keeping a founder hungry only works if the founder has a safety net. In this segment the founder typically has their entire net worth locked into a business built on internal accruals, not equity, and a financially anxious founder optimises for survival. They under-bid. They avoid the contract that would stretch capacity. They decline the risk that actually creates value. Securing their position is what frees them to take it. It follows our core principle exactly: reinforce the structure, don’t destabilise it.
Has it backfired? It can, if secured becomes complacent. We guard against that by tying the lock-in to forward milestones rather than a clean cash-out, the founder is de-risked personally but still holds meaningful upside, and still leads.
It’s the same discipline we apply to involvement generally: present at the decisions that carry long-term consequences, deliberately absent from the ones that don’t.
The fund is sponsored by the team behind Fabtech Technologies and Fabtech Cleanrooms. That is rare access into the segment. It also raises a fair question: how do you manage the line between the sponsor’s strategic interests and the fund’s fiduciary duty, particularly on competitive deal flow and shared supplier relationships?
The sponsor’s position is exactly why we see companies like TSA before anyone else, and precisely why the governance has to be explicit rather than assumed. We operate as a SEBI Category-II AIF with an independent trustee, Mitcon Credentia, and independent valuation agencies marking every position; we do not value our own book. Any transaction touching a sponsor entity is treated as related-party, priced at arm’s length, and disclosed to the investment committee and LPs, the sponsor earns no preferential terms for being the sponsor.
On shared suppliers and competing deal flow, the fund’s duty to its LPs takes precedence, full stop, and that order is documented, not implied. The anchor operating company is now publicly listed, at roughly ₹411 crore of revenue, which layers additional public-market disclosure and audit over the whole ecosystem. The access is the edge. The controls are what make the access investable, rather than merely convenient.
Most pharma engineering promoters have grown their companies on internal accruals and working capital lines, not equity. From your experience, what actually changes inside a business in the first twelve months after institutional capital enters, beyond the balance sheet?
The capital is the least interesting part of it. Within the first year the changes that matter are structural. The company becomes able to pass a serious customer’s vendor qualification, because we help build the quality systems and documentation a large buyer now demands.
Large pharma is increasingly awarding work on execution capability and manufacturing track record, not price, that’s the bar we get a company over, and clearing it moves the business from sub-contractor to qualified vendor at the exact moment “China Plus One” reshoring is pulling that demand toward India.
Financial discipline follows: real cost visibility, monthly closes, board-grade reporting, where before there was bank-balance intuition. And confidence follows too, with working capital and structure in place, founders stop declining contracts they were technically able to win all along. We reinforce; we don’t take over. The founder still runs the company. What changes is how much pressure the business can now absorb without cracking.
Cleanroom, MEP, process equipment, and infrastructure firms often compete on price because they lack the capital to compete on capability, certifications, or geography. How does fund partnership specifically shift a company’s ability to move up the value chain, whether that is qualifying for regulated markets, investing in R&D, or bidding for larger EPC contracts?
Firms compete on price when price is the only lever they can afford. Moving up the value chain, regulated-market qualification, sterile suites, water-for-injection, EU-GMP-grade scopes, takes front-loaded investment a price-competitor cannot self-fund; a single GMP-compliant line now runs over $3.4 million. The prize is real: India already hosts more than 650 USFDA-compliant plants, the most of any country outside the United States, and supplies a fifth of the world’s generics, that regulated-market work is where the margin lives, and it’s closed to anyone who can’t qualify.
Capital solves part of it. Capital plus the ecosystem does the rest, operators who have actually built these capabilities, a network that opens the right doors, the judgment to sequence the spend correctly. As India localises the roughly 72% of bulk-drug inputs it still imports from China, the firms that can bid larger, regulated scopes are the ones that capture it. “Beyond capital” isn’t a slogan for us. It’s the part that actually moves a company off price.
For a promoter weighing a strategic acquirer, a family office, and a specialised AIF like yours, what is the honest case for the AIF route? Where does it structurally win, and where should a founder legitimately prefer one of the other two?
Honestly: a strategic acquirer pays the highest headline number but takes control, right if you’re ready to sell and step back. A family office is patient and rarely interferes, but seldom brings sector-specific operating capability either, right if you want passive capital and already know how to scale on your own.
We win structurally in exactly one case: you’re not ready to sell, and you want capital alongside people who have actually built, listed and exited businesses like yours, so the company is materially stronger by the time a strategic does eventually show up, at a higher multiple than today.
That’s not theoretical; it’s the arc from a small fabricator to a 26x strategic sale. We’re the bridge, not the destination. Prefer the strategic for maximum liquidity now, or the family office for a hands-off cheque. We’re candid that we suit founders who want to build with discipline, not those looking for a passive glide path to retirement.
Pharma engineering does not yet have a deep secondary market, and IPO windows for sub-500Cr revenue engineering businesses are narrow. Realistically, what does the exit distribution look like across this portfolio, and over what timeframe?
Weighted to strategic M&A. I’d expect most exits to be trade sales to strategics consolidating the segment, TSA-to-Thermax is the template, and the wave above it is real, running all the way down from billion-dollar CDMO mergers. Four to seven years is a realistic hold, long enough for systems to actually mature. A smaller number, the companies that reach genuine scale with clean compliance, become IPO or pre-IPO candidates, our own anchor operating company listed in 2025, and those are the outsized outcomes, not the base case.
A third route is secondary sales to the larger PE platforms now assembling assets across this value chain. What I won’t dress up: this segment has no deep secondary market yet, so we underwrite every investment to a strategic sale as the base case and treat a listing as upside, never the plan. Our own track record spans that reality, outcomes from a clean 2.8x exit to 26x and 30x, which is what underwriting to a realistic exit, rather than a hoped-for one, produces.
Your stated philosophy is to invest in businesses you “can see yourselves a part of.” That is a personal lens, not a financial one. Name a deal you walked away from, despite the numbers, and one you took, despite the numbers.
Our lens, invest only in businesses we can see ourselves genuinely part of, means we’ve declined financially attractive deals where the understanding wasn’t there, and backed businesses the entry numbers didn’t flatter because the systems and the people were right. Money without understanding creates friction; we would rather pass than fund something we can’t strengthen because we don’t understand it well enough.
Two we passed on have stayed with me, for opposite reasons.
The first was a pharmaceutical serialisation and track-and-trace business, a sensible market, workable numbers, but the team wasn’t there, and on our very first call the current CEO told me, in as many words: “This isn’t like a family business or something I’ll want to stick with forever, eventually, even I’ll want an exit.” That ended it. Our whole philosophy is to back businesses we can see ourselves part of; when the man running the show can’t see himself part of it, there’s no multiple that changes the answer.
The second was harder: a Hyderabad contract research organisation, a sharp young pharmacology-and-toxicology shop incubated out of a university life-sciences park, quietly using its services revenue to bankroll its own novel-molecule programme. The founder was one of the most capable we’ve met, but underneath, the business didn’t fit our thesis, and we don’t bend the thesis to keep a founder we admire. Walking away from that one is what this philosophy actually costs.
The one we took against the numbers was an Ahmedabad maker of aseptic vial-and-ampoule filling lines, run by a family that had been building these machines for the better part of four decades. The entry metrics didn’t flatter it, and for a plain reason: no one had ever installed the operational and financial discipline a business with that much real capability deserved. Right people, right fit, genuine engineering, just missing the structure. That gap is exactly the one we exist to close, so we’re closing it. Read on the spreadsheet alone, we’d have passed. Read through the founder and the systems, it was obvious.
In a sector this engineering-led and this founder-dependent, the entry multiple tells you only what a business was. Our own is a record of backing what a business could become, read through the founder and the systems, not the spreadsheet.
About the guest
Mr. Aamer Khan is the Fund Manager at Alanar Capital, leading Alanar One, a SEBI Category II AIF focused on India’s pharma engineering and life sciences ecosystem. He works closely with founder led businesses, combining growth capital with strategic and operational expertise to help companies scale sustainably.
Disclaimer: The views and opinions expressed in this editorial are those of the interviewees and are based on their professional experience in pharmaceutical engineering and sterile manufacturing. They do not necessarily reflect the official views, policies, or positions of Hello Pharma, its management, or its affiliates. Hello Pharma does not endorse or take responsibility for any specific technical, commercial, or regulatory interpretations presented in this article. Readers are encouraged to independently evaluate the information shared, review applicable regulatory guidance, and rely on their own experience, expertise, and professional judgment before making decisions related to equipment selection, system design, validation strategy, or regulatory compliance.
