Indian Pharmaceutical Industry

• About: India ranks 3rd globally in pharmaceutical production by volume and 14th largest in terms of value, supplying over 50% of global vaccine demand and 40% of generic medicines in the US. 
• Size: The Indian pharmaceutical industry for FY 2023-24 is valued at USD 50 billion, contributing around 1.72% to the GDP, and is projected to reach USD 130 billion by 2030.
  • India’s biotechnology sector, valued at USD 137 billion in 2022, aims for USD 300 billion by 2030. 
• Key Segments:
  • Generic Medicines: India is the world’s largest supplier, meeting 20% of global demand. 
  • Active Pharmaceutical Ingredients (APIs): India produces over 500 APIs, contributing 8% to the global API market. 
  • Medical Devices: The market is projected to grow from USD 11 billion to USD 50 billion by 2030. 
• Growth Drivers: 
  • Affordable Pricing: Indian drugs are significantly cheaper than Western alternatives. 
  • Government Support: Policies such as the Production-Linked Incentive (PLI) scheme promote domestic manufacturing. 
  • Strong R&D Base: India has a large pool of scientists and engineers driving innovation e.g., India now ranks 6th globally in terms of patent applications, with 64,480 patent filings in 2023. 
  • Increasing Global Demand: Rising chronic diseases and an aging global population fuel demand for cost-effective medicines. 
• Exports: India exports medicines to over 200 nations, with FY24 exports reaching USD 27.82 billion.
  • India ranks 12^th globally in medical goods exports, driven by rising demand for biosimilars and specialty drugs. 
• Government Initiatives: Production Linked Incentive Scheme (PLI), Promotion of Bulk Drug Parks Scheme, National Medical Device Policy 2023. 

Note: APIs are the biologically active components in a drug that produce the intended therapeutic effect. They are the key ingredients responsible for treating or managing a medical condition. 

Challenges the Pharma Industry Face

• Quality Issues: Concerns over the quality of Indian medicines have emerged due to incidents like the Gambia cough syrup deaths in 2022. 
• Regulatory Hurdles: Compliance with evolving Good Manufacturing Practice (GMP) and quality control regulations is costly. 
• Dependence on API Imports: India imports 70% of APIs, primarily from China, creating supply chain vulnerabilities. 
• Pricing Pressures: Strict price controls under National List of Essential Medicines (NLEM), impact the profitability of pharma companies hindering innovation incentives for Industry. 
• Global Competition: There is rising competition from China, the US, and the EU (highly sophisticated and well researched products), while Vietnam and Indonesia emerge as manufacturing hubs. 
• Skill Shortage: There is a lack of trained professionals in biotechnology, biosimlars and drug discovery.
  • E.g., dependence on generic drugs rather than innovative formulations affects global competitiveness. 

Way Forward 

• Domestic API Manufacturing: PLI 2.0, bulk drug parks, fermentation-based APIs, and green chemistry can strengthen API production, ensuring self-reliance and supply stability.  
• Expanding High-Value Drug Markets: Indian firms should expand R&D in gene therapies, personalized medicine, and mRNA and next-gen vaccines to tap into growing specialty therapy opportunities. 
• Enhancing R&D: R&D incentives through tax benefits, research grants, and public-private partnerships (PPPs), AI-driven drug discovery, big data in clinical
• trials, and telemedicine will boost innovation and patient outcomes. 
• Regulatory & Quality Compliance: Faster approvals for biosimilars, innovative drugs, and breakthrough therapies will improve time-to-market.
  • Enhancing drug safety monitoring will boost consumer trust and regulatory credibility. 
• Global Market Penetration: Expanding exports to Africa, Latin America, and ASEAN via trade deals and overseas manufacturing will overcome trade barriers and boost growth.