The Indian Pharmaceuticals industry plays a prominent role in the global pharmaceuticals industry. India ranks 3rd worldwide for production by volume and 14th by value. Read here to learn more about the Indian Pharma sector.
India is the largest provider of generic medicines globally, occupying a 20% share in global supply by volume, and is the leading vaccine manufacturer globally.
India also has the highest number of US-FDA-compliant Pharma plants outside of the USA and is home to more than 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities as well as a highly-skilled resource pool.
The pharmaceutical industry in India offers 60,000 generic brands across 60 therapeutic categories. Major segments include generic drugs, OTC Medicines, API/Bulk Drugs, Vaccines, Contract Research & Manufacturing, Biosimilars, and Biologics.
Indian Pharmaceutical industry
Indian pharma companies enabled by their price competitiveness and good quality, have made a global mark, with 60% of the world’s vaccines and 20% of generic medicines coming from India.
100% Foreign Direct Investment (FDI) in the pharmaceutical sector is allowed under the automatic route for greenfield pharmaceuticals.
- 100% FDI in the pharmaceutical sector is allowed in brownfield pharmaceuticals; wherein 74% is allowed under the automatic route and thereafter through the government approval route.
India is a major exporter of Pharmaceuticals, with over 200+ countries served by Indian pharma exports.
- India supplies over 50% of Africa’s requirement for generics, ~40% of generic demand in the US, and ~25% of all medicine in the UK.
- India also accounts for ~60% of global vaccine demand and is a leading supplier of DPT, BCG, and Measles vaccines.
- 70% of WHO’s vaccines (as per the essential Immunization schedule) are sourced from India.
The country also has a large pool of scientists and engineers with the potential to steer the industry ahead to greater heights.
- Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
India is rightfully known as the “pharmacy of the world” due to the low cost and high quality of its medicines.
India is the 12th largest exporter of medical goods in the world.
- Indian drugs are exported to more than 200 countries in the world, with the US being the key market.
- Generic drugs account for 20% of the global export in terms of volume, making the country the largest provider of generic medicines globally.
Advantage India in the Pharmaceutical sector
The main growth drivers of the Indian pharma sector are:
- Government Support: Government incentives like Production linked incentives schemes for the pharma sector.
- Medical tourism: Quality services at marginal costs compared to the US, Europe, and South Asia
- Infrastructure development: India has the highest number of US-FDA-compliant plants outside the US.
- Strong drug manufacturing: Expertise in low-cost generic patented drugs as well as end-to-end manufacturing.
- Strong domestic demand: Launch of the largest National Health Protection Scheme globally.
- Cost efficiency: Low cost of production and R&D boosts the efficiency of Indian pharma companies, leading to competitive exports.
- Economic drivers: High economic growth along with increasing penetration of health insurance to push expenditure on healthcare and medicine in India.
- Increased investment: The FDI inflows in the Indian drugs and pharmaceuticals sector are increasing with each year.
Challenges faced by the Indian pharmaceutical industry
- India has a lot of talent and labor, but its infrastructure for innovation is still lacking. To increase India’s creativity, the government must fund talent and research projects.
- Clinical trials and subjectivity in specific regulatory decision-making should be encouraged by the government.
- India depends substantially on foreign nations for intermediates and active pharmaceutical ingredients (API). China is the source of imports for 80% of APIs.
- India is thus at the mercy of erratic price changes and supply interruptions. To stabilize supply, it is required to implement infrastructure improvements in the area of internal facilities.
- Since 2009, the Food and Drug Administration (FDA) has conducted the most inspections in India; as a result, continuing investments in raising quality standards would divert money away from other areas of growth and development.
- Due to the difficulty posed by India’s frequent and unforeseen adjustments to its domestic pricing policies; the climate for investments and ideas has become hazy.
Government initiatives for the pharma sector
The Indian pharmaceuticals market is supported by the following Production Linked Incentive Schemes to boost domestic manufacturing capacity, including high-value products across the global supply chain.
- PLI Scheme for Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) (PLI 1.0)
- Production-Linked Incentive (PLI) Scheme for Pharmaceuticals d (PLI 2.0)
The products under the PLI schemes are divided into 3 categories:
- Category 1: Biopharmaceuticals, Complex generic drugs, Patented drugs or drugs nearing patent expiry, Cell-based or gene therapy products, Orphan drugs, Special empty capsules, Complex excipients, Phyto-pharmaceuticals
- Category 2: Active Pharma Ingredients (APIs), Key Starting Materials (KSMs), Drug Intermediaries (Dls)
- Category 3: Repurposed Drugs, Auto-immune drugs, Anti-cancer drugs, Anti-diabetic drugs, Anti Infective drugs, Cardiovascular drugs, Psychotropic drugs, Anti-Retroviral drugs, Fermentation based 4 KSMs /DIs
Under the ‘Promotion of Bulk Drug Parks’ Scheme, the Union government aims to develop 3 mega Bulk Drug parks in India in partnership with the States.
- The parks will have common facilities such as a solvent recovery plant, distillation plant, power & steam units, and a common effluent treatment plant.
Strengthening of Pharmaceutical Industry (SPI) Scheme was announced in 2022 and received a 500-crore financial outlay for the period FY 2021-22 to FY 2025-26.
- The objective of the scheme is to foster resilience and future readiness in the existing infrastructure facilities to make India a global leader in the Pharma Sector.
Promotion of medical devices parks
- The objective of the scheme is the Creation of world-class infrastructure facilities to make the Indian medical device industry a global leader
- Easy access to standard testing and infrastructure facilities through the creation of world-class Common Infrastructure Facilities for increased competitiveness will result in a significant reduction in the cost of production of medical devices leading to better availability and affordability of medical devices in the domestic market.
Scheme for the Establishment of AYUSH Super Specialty Hospitals/ Day Care Centres for Medical Tourism
- The Champion Services Sector Scheme for Medical Value Travel has been framed by Govt. of India to enhance Medical Tourism in the country, especially in the field of the Traditional System of Medicine
- The objective of the scheme is to encourage private investors to invest in the AYUSH sector through the Establishment of World Class, State of Art Super Specialty Hospitals/ Day Care Centres of the systems recognized under the Indian Medicine Central Council (IMCC) Act, 1970 or Homeopathic Central Council (HCC) Act, 1973.
- The scheme is for promoting the export of medical value travel services including services supplied to foreign consumers in India by providing interest subsidy.
Pharmaceuticals Promotion Development Scheme (PPDS)
Under the PPDS, the Department of Pharmaceuticals aims to:
- Conduct Training/knowledge improvement programs/activities on issues/subjects relevant to the growth of the pharmaceutical industry.
- Organize Summits, conventions, Exhibitions, Pharmacy week, meetings, etc. in India and abroad and produce promotional materials like films, displays, etc.
- Conduct research studies, sector reports, etc.
The Indian pharmaceutical industry is a significant part of the nation’s foreign trade and offers lucrative potential for investors.
Millions of people around the world receive affordable and inexpensive generic medications from India, which also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP) standards set by the World Health Organization (WHO) and the United States Food and Drug Administration (USFDA).
The capacity of firms to orient their product portfolio towards chronic treatments for diseases like cardiovascular, anti-diabetes, anti-depressants, and anti-cancers, which are on the increase, will also play a role in future domestic sales growth.
The Indian government has made several measures to cut expenditures and lower healthcare prices.
- The opening of pharmacies that provide low-cost generic medications as well as other government initiatives, such as the National Health Protection Scheme, which aims to provide universal healthcare, the aging population, the rise in chronic diseases, and other factors should all help to strengthen the Indian pharmaceutical industry.
The quick entry of generic medications into the market has remained a priority and is anticipated to help Indian pharmaceutical businesses. Also, the focus on preventative immunizations, life-saving medications, and rural health programs bodes well for the Indian pharmaceutical industry.
-Article written by Swathi Satish
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