India's pharmaceutical sector has emerged as a global leader in research and innovation, driven by a combination of a robust scientific and technological base, growing government support, a strong domestic market, and cost-competitive manufacturing.

The sector contributed nearly 1.32% of the Gross Value Added to the Indian Economy in 2020-21. The total annual turnover of Pharmaceuticals in the fiscal year 2021-22 was $42.34 Bn. Major segments of the Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & manufacturing, biosimilars and biologics.

The Economic Survey 2022-23 mentions that India is ranked 3^rd worldwide in the production of pharma products by volume and 14th by value. India is the largest provider of generic medicines globally, occupying a 20% share in global supply by volume, and is also the leading vaccine manufacturer globally with a market share of 60%, contributing 40 to 70% of the WHO demand for Diphtheria, Tetanus and Pertussis (DPT) and Bacillus Calmette–Guérin (BCG) vaccines and 90% of the WHO demand for the measles vaccine. There are 500 API manufacturers contributing about 8% of the global API Industry. India is the largest supplier of generic medicines. It manufactures about 60,000 different generic brands across 60 therapeutic categories and accounts for 20% of the global supply of generics. Access to affordable HIV treatment from India is one of the greatest success stories in medicine. Because of the low price and high quality, Indian medicines are preferred worldwide, making it the pharmacy of the world. 

From FY18 to FY22, the Indian pharmaceutical industry logged an average growth rate of 9.47% to $42.34 Bn, primarily driven by an increase in exports and a rise in the domestic market. It is expected that the Pharma sector is likely to reach $65 Bn industry by 2024 and $120 Bn by 2030. To sustain growth in the sector, the government has taken many steps to further research and innovation. 

Vision Pharma 2047: By the year 2047, the Government aims to accomplish the following goals:

• Make India a global leader in the manufacturing of affordable, innovative & quality pharmaceuticals & medical devices for the goal of Vasudhaiva Kutumbakam
• Vishwaguru in innovation & Research for delivering health care products to future generations in a sustainable manner, introducing natural products
• Ensure accessibility & affordability of patient-centric products for better healthcare outcomes for universal health coverage by building upon partnerships across industry, science and governments
• Contribute to the Health System to attain a union of equity, efficacy, and efficiency towards developing a holistic products profile with a focus on NCDs, AMR, and rare & neglected diseases
• Create equilibrium between social, economic, & governance aspects through facilitative, balanced & progressive policy and regulatory framework
• Reduce India’s carbon footprint in Pharma-MedTech to align with Hon’ble PM’s vision of Panchamrita
• Identifying critical suppliers, de-risking & decarbonising the supply chain, and  promoting local sourcing
• Medical Devices to be an integral part of global supply chains for raw materials, components, spare parts, assemblies/subassemblies, etc.
• Digitisation and technology upgradation in the delivery of services & products under Jan Aushadhi Pariyojana

National Pharmaceutical Policy (2023): Aligned with Vision 2047, the policy is being drafted to serve as a comprehensive framework to address the challenges faced by Indian Pharmaceutical industries and provide definitive policy interventions to enhance the collective ecosystem. The draft policy encompasses five key pillars: Fostering Global Pharmaceutical Leadership, Promoting Self-Reliance, Advancing Health Equity and accessibility, Enhancing Regulatory Efficiency in the Indian Pharmaceutical Sector and Attracting investments. 

Liberalised Foreign Direct Investment (FDI) Limit: The Government has allowed up to 100% FDI through the automatic route for Greenfield investments and up to 74% for Brownfield investments. As a result of these policies, the sector has attracted 3% of the total FDI equity inflow, worth over $21.5 Bn since April 2000. 

Scheme for Strengthening of Pharmaceuticals Industry (2022): The scheme, launched with a total financial outlay of INR 500 Cr until FY 2025-26, to strengthen the existing pharmaceutical clusters’ capacity by creating common facilities; to facilitate MSMEs of a proven track record to meet regulatory standards; and to facilitate growth and development of Pharmaceutical and Medical Devices Sectors.  

Scheme for Promotion of Bulk Drug Parks (2020): The scheme boosts domestic manufacturing of identified KSMs, Drug Intermediates and APIs by attracting large investments in the sector. Financial assistance, up to INR 1000 Cr, will be provided for the creation of common infrastructure facilities in three Bulk Drug Parks selected in Gujarat, Himachal Pradesh, and Andhra Pradesh.

Scheme for Human Resource Development in the Medical Device Sector (2023): The scheme was launched with a vision to bridge the gap between industry and academia, provide a skilled workforce to the industry and help in developing a research & development ecosystem for the medical device sector by training around 5,400 students over a period of 3 years. The scheme aims to fulfil the objectives of the Medical Device Policy, which include reaching a $50 Bn market size by 2030 and reducing India's dependence on imported high-end medical devices. 

Scheme for Promotion of Research and Innovation in Pharma MedTech Sector (PRIP): The scheme, launched in 2023 with a financial outlay of INR 5000 Cr until FY 2027-28, aims to transform the Indian Pharma MedTech sector from cost-based to innovation-based growth by promoting industry-academia linkage for R&D in priority areas. The scheme envisages the establishment of specialised Centres of Excellence at all seven National Institute of Pharmaceutical Education & Research (NIPERs) and the provision of funding for R&D in six priority areas.

Production Linked Incentive (PLI) schemes: To revive the country’s manufacturing sector during the COVID-19 pandemic, the Government launched Production Linked Incentive Schemes, with an outlay of INR 1.97 Lakh Cr, targeting 14 critical sectors. These schemes were aimed towards making domestic manufacturing globally competitive and creating domestic leaders in manufacturing. The PLI schemes relevant to pharma sector are as follows:

• PLI for Pharmaceuticals: The scheme was launched, with an outlay of INR 15,000 Cr until FY 2027-28, to boost India’s manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high-value goods. The scheme provisions rate of incentives between 3% to 10% on incremental sales (over the base year of FY 2019-20) of pharmaceutical goods covered. So far, 55 companies have been approved under the scheme. 
• PLI for Promoting Domestic Manufacturing of Medical Devices: The scheme, with an outlay of INR 3420 Cr till FY 2027-28, is being provided for the creation of common testing and laboratory facilities/centres in four Medical Device Parks. This initiative, providing financial incentives at the rate of 5% of incremental sales, will reduce manufacturing costs significantly and will help create a robust ecosystem for medical device manufacturing in the country. The scheme targets:
  1. Cancer care/Radiotherapy medical devices
  2. Radiology & Imaging medical devices and Nuclear Imaging Devices
  3. Anaesthetics and cardio-respiratory medical devices, including Catheters of Cardio-respiratory Category and renal Care Medical Devices
  4. All Implants, including implantable electronic devices

        In total, 21 applicants have been approved under the scheme.

• Production Linked Incentive (PLI) Scheme for Promotion of Domestic Manufacturing of Critical Key Starting Materials (KSMs)/ Drug Intermediates and Active Pharmaceutical Ingredients (APIs) in the Country: The scheme, with an outlay of INR 6,940 Cr for six years until FY 2029-30, was formulated to provide financial incentives of 5% to 20% over base year. The scheme is aimed at attaining self-reliance and reducing import dependence in 53 critical KSMs/Dis/APIs. So far, 48 companies have been selected under the scheme. 

Due to the PLI scheme, the sector witnessed a 46% increase in FDI inflows from FY 2021-22 to FY 2022-23 and a significant reduction in imports of raw materials in the pharma sector.

Other initiatives:

Biotechnology Industry Research Assistance Council (BIRAC), a Section-8 company of the Department of Biotechnology, has facilitated the implementation of R&D projects for drug discovery in the areas of TB, Anti- Microbial Resistance (AMR), Diabetes, Cancer, Rare Diseases, etc., through various schemes like Biotechnology Ignition Grant, Small Business Innovation Research Initiative, Biotechnology Industry Partnership Programme etc. It also supports bio-incubation centres in the pharmaceutical sector through BioNEST and EYUVA schemes. Over the past five years, 17 pharmaceutical products or technologies have been developed, transferred, or commercialised under these schemes.

CSIR- Central Drug Research Institute: A premier drug research centre, the institute primarily works in the area of malaria, leishmaniasis, AMR and bone health.   

The Government of India has adopted a multipronged approach by involving industry and academia, creating infrastructure, etc., to further research and innovation in the pharma sector. The above-mentioned policies are helping to create an environment that is conducive to innovation in the pharmaceutical sector. 

India's pharmaceutical sector is well-positioned to continue to be a leader in research and innovation in the years to come. The country's strong scientific and technological base, growing government support, and large domestic market will continue to drive innovation. In addition, India's cost-competitive manufacturing capabilities will make it an attractive location for global pharmaceutical companies to conduct R&D.