• India’s pharmaceutical market currently valued at $50 billion is the world’s third-largest by volume. 

• The pharma industry is expected to reach $130 billion by 2030, according to the Economic Survey 2023-24.

• With a diversified product base covering generic drugs, active pharmaceutical ingredients, bulk drugs, over-the-counter drugs, vaccines, biologics and biosimilars, the Indian pharmaceutical industry has a strong presence at the global level. 

• “Pharmacy of the world” as it is often called offers around 60,000 generic brands across 60 therapeutic categories, accounting for 20 per cent of global generic drug exports by volume. 

• As many as eight of the top 20 global generic companies are based in India.

• To further bolster the regulatory framework, in December 2023, revised pharma manufacturing rules were notified under Schedule-M relating to Good Manufacturing Practices, a mandatory requirement that safeguards quality and brings the existing regime in line with global standards.

• India’s pharmaceutical industry has traditionally been dependent on Active Pharmaceutical Ingredients (API) imports from one country. 

• India’s import dependency is largely due to a lack of cost-effective options in domestic API manufacturing compared to imports. Domestic infrastructure and R&D capabilities have improved considerably in recent years, but challenges remain.

• The next leg of growth in pharma necessitates skill advancement, the use of innovation and technology, and the establishment of a strong supply chain.

• The PLI schemes for bulk drugs and pharmaceuticals have helped stabilise the import of bulk drugs and improved our supply chain resilience. 

• Under the PLI scheme for bulk drugs, 48 projects have been approved with a committed investment of Rs 3,938.6 crore.

• The scheme for the Promotion of Bulk Drug Parks provides support to establish three bulk drug parks for the creation of world-class Common Infrastructure Facilities. This will bring down the manufacturing cost of bulk drugs and improve India’s competitiveness and drug security.

The need for a combination of innovators and generic producers

• The pharmaceutical industry worldwide can be divided into an innovator or a generic producer. As the name suggests, ‘innovator’ firms carry out extensive research to bring new medicines or treatments for diseases to the world. 

• Considering the extent of time and resources as also the risk involved in the process, the prices of such medicines are usually very high. Such firms thrive on monopolies created through intellectual property rights owned by them for these new medicines. 

• In recent years, big innovator pharma companies have made a strategic move to invest in smaller, more agile research-oriented firms. Between 2021 and 2023, the investment amounted to $54 billion in small biotech firms.

• India’s strength in the pharmaceutical sector lies in being a cost effective and efficient producer of existing off patented drugs — also called the generic industry.

• Even so, research and development (R&D) is key to producing the same medicines once they get off patent at a fraction of the cost of the original drug. They thrive on competition. 

• The world needs both the innovators and those that can provide drugs at a reasonable price, with the latter playing a vital role in enhancing social benefits. 

• Hence, the strength of the industry lies in having a diverse combination of innovators and generic producers.

• As we move towards realising the vision of Viksit Bharat, it is vital to promote innovation.

• The R&D expenditure in the drugs and pharmaceutical sector in India averaged around 5 per cent of the sales turnover in FY20 and FY21. 

• The development of new drugs aimed at addressing unaddressed health concerns will improve the breadth and quality of healthcare access for the population, while producing better returns on investments.

• The recently introduced Promotion of Research and Innovation in pharma medtech sector is expected to herald a transformation in the pharmaceutical sector towards innovation.

A recent report underscores the need for:

i) Fostering joint research amongst industry actors with the aim of making the sector more strategically collaborative rather than competitive.

ii) Bolstering industry-academic interactions for applied research, in particular better participation of public knowledge-based institutions.

iii) Reducing the rigidity of communication between knowledge-based institutions in order to foster better knowledge exchange and collaboration in the areas of research, particularly with the inclusion of Tier 2 and Tier 3 institutions.

iv) Supporting secondments and placements between knowledge-based institutions and industry in order to better orient human capital development.

v) Strengthening communication channels amongst the knowledge-based institutions and intermediaries, particularly industry associations.

vi) Increasing the channels of funding from venture capital and angel investors to support the process of ideation to market.

vii) Better knowledge sharing amongst government bodies to promote an ‘all-of-government-approach’ to innovation thus translating into more coordinated joint research in strategic areas.

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