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  • Brendan Shaw

The rise of India's pharmaceutical sector

Ambrish Singh & Brendan Shaw

"The Indian pharmaceutical industry has been a key aspect for the Indian economy."

- Indian Prime Minister, Narendra Modi, November 2021

India is one of the leading producers of medicines and vaccines globally and the industry has been growing rapidly for a number of years in producing generics for the world. India is now looking to pivot towards greater self-reliance in active ingredients and in innovative drug development.

The 'pharmacy of the world'

The Indian pharmaceutical industry is growing remarkably, starting from a position where only 5% of the medicines used in India were produced within the country in 1969 to today in 2020 where 80% of the medicines in the Indian pharma market being made in India. Over the last two decades, the Indian pharmaceutical industry has grown tenfold and established itself as a leader in both global generic pharmaceuticals and vaccine landscape and is often dubbed the “Pharmacy of the World.”

The industry has been growing by 13% to 14% per annum over the period over the last 5 years, compared to 9% per annum between 2000 and 2005.

Today, Indian pharmaceutical and vaccine producers supply more than one-fifth of the global market for generic medicines and more than 60% of the global vaccines market. In the last five years, exports from the Indian pharmaceutical sector have grown at a compound annual growth rate (CAGR) of above 6%, with exports reaching around USD 21 billion in 2020, despite the ongoing COVID-19 pandemic.

This growth was driven mainly by the export of more than 60,000 generic brands across 60 therapeutic categories to more than 200 countries comprising both developed and developing countries. Today, India supplies 20% of the world's global active pharmaceutical ingredients (APIs), following China which accounts for 44% of the global API market.

Much of India’s pharmaceutical strategy for many years – shared by both local companies and governments – was to make cheap, quality generic small molecule medicines at mass scale to sell to markets around the world. This strategy was very successful. For instance, more than 25 % of the medicines used in the UK and 40% of generics sold in the US were sourced from India. The US, in particular, is a major market for the Indian pharmaceutical sector, being the sector's largest market by accounting for nearly one-third of India's total pharma exports. At the same time, 80% of antiretroviral drugs in the world – key in the fight against AIDS in developing nations – are produced in India.

Share of top five Indian pharma export destination (%), 2018-19

Source: Shawview Consulting analysis of Pharmexcil data,

Vaccines are another health technology – whose value has never been appreciated more in history than now – that is heavily dominated by Indian pharma producers globally. Exporting to more than 150 nations, India supplies between 40 to 90% of the World Health Organization’s need for diphtheria, pertussis (whooping cough), and tetanus (DPT), Bacille Calmette-Guérin (BCG), and measles vaccines for its global program to eliminate these diseases. Given the capability of Indian vaccine manufacturers to produce and develop affordable and high-quality vaccines, it is not surprising that Indian vaccine manufacturers such as the Serum Institute of India – the world's largest vaccine maker – and Bharat Biotech are playing a crucial role in addressing the demand for COVID-19 vaccines globally.

The Indian pharmaceutical industry is comprised of both Indian manufacturers and multinational companies. The largest Indian pharmaceutical companies in the world today are Sun Pharma, Aurobindo Pharma, and Dr. Reddy’s Laboratories.

New Indian pharmaceutical policy directions

India is now a substantial player in the global generic and vaccine market. However, due to mounting cost-pressures globally and competition from other fast-emerging producer nations such as China, targeted efforts are being introduced by the Indian national government and state governments to consolidate the Indian industry’s position and identify new frontiers for further growth.

For example, the Indian national government has pharma strategies such as production linked incentive scheme for bulk drugs and pharmaceuticals and has scheme to setup three bulk drug parks with common infrastructure facilities. Also, the governments of states like Karnataka, Maharashtra and Telangana have made big pushes to support the growth, development, and sophistication of their local pharmaceutical sectors.

Earlier this year in its 2021 Budget, the Indian government introduced a major new funding package to help develop India's pharmaceutical sector. The initiative is in part a move by the government to reduce the Indian pharma industry's dependence on China for raw materials, a feature highlighted during the early days of the COVID-19 pandemic in early 2020 when India's sector suffered shortages as China temporarily halted manufacturing at the start of the outbreak there.

The Indian pharmaceutical industry is currently ranked third largest supplier in the global market by volume, but only ranked 14th in the world by value. A significant part of the industrial strategies of the Indian national government and state governments is to encourage Indian pharmaceutical producers to move up the value chain by transitioning beyond basic production of generics and tapping into the potential opportunities in new innovation models for the vaccine, biosimilars, and complex generics.

Within the last month, the Indian government has released a draft policy plan to drive R&D and innovation in the pharma and medtech sectors. The new proposed policy is designed to strengthen and harmonise regulatory frameworks, encourage public and private sector investment in innovation - including fiscal incentives - and create a more supportive 'eco-system' to drive innovation and cross-sectoral R&D. The new policy will look to streamline and speed up regulatory approval processes, encourage commercialisation opportunities for universities and research institutes, and even seek to encourage investment and commercialisation by potentially mirroring the Bayh-Dole Act from the United States.

Most recently, the Indian Prime Minister announced a policy goal for India to be a leader in drug discovery and innovative medical devices, looking to expand innovation and attract foreign innovative companies to the country.

New opportunities

A few recent examples show the promising development of the Indian pharmaceutical industry as it transitions to a higher level of complexity and technological development.

The partnership between AstraZeneca and the Serum Institute of India to produce AZ’s COVID-19 vaccine is an important example and timely. The success of this agreement provides a path for future collaborations between global innovators and Indian companies that have expertise in the mass-scale production of vaccines and other pharmaceuticals.

Moreover, at least five companies are currently collaborating with global partners to produce COVID-19 vaccines, while companies like Bharat Biotech and Zydus Cadila have indigenously developed their own COVID-19 vaccines. Interestingly, Bharat Biotech also recently signed a product transfer agreement with GSK to produce the world’s first malaria vaccine through technology transfer to enable long-term sustainable supply. Bharat Biotech will be the sole global manufacturer of the breakthrough new malaria vaccine.

Moving from the production of basic generics to high-quality complex generics – a generic that could have a complex active ingredient, complex formulation, complex route of delivery, or complex drug-device combinations – could be the next growth driver for the Indian pharmaceutical industry. Some of the top Indian pharma producers such as Sun, Dr. Reddy’s, Zydus, Glenmark, Aurobindo, Torrent, Cipla, and Lupin have already moved in this direction by creating a pipeline of complex generics in inhalation, injectable, ophthalmic, dermatology, and oncology categories. Given the experience in the generic segment and track record, India is well-positioned to tap in this segment.

Indian pharmaceutical clusters

Source: Invest India, "Pharmaceuticals", National Investment Promotion and Facilitation Agency,, accessed 20/11/2021.

Biosimilar manufacture is another such area that could spur the future growth trajectory for Indian pharma and presents new opportunities. The global biosimilar market is estimated to be around USD 36 billion by 2025, growing from USD 12 billion in 2020 at a CAGR of 25%, so this provides opportunities for Indian companies. Moreover, the approval of biosimilars in the last five years has witnessed an encouraging trend after the first biosimilar was approved in the Europe in 2006 and in the US in 2015. So far, the Indian regulatory body has been very open to approving biosimilars, with around 93 biosimilars approved in India compared to 61 in the European Union and 26 in the US.

The experience of successfully launching biosimilars in the domestic market can be a positive point for the Indian pharmaceutical industry. Companies like Biocon have already charted agreements with other global partners such as Mylan to launch the biosimilar version of trastuzumab and pegfilgrastim in the US market. With many Indian companies having hundreds of biosimilars in the pipeline, Indian pharma is already betting on biosimilar's role to consolidate and expand its global market share focussing more on value rather than volume.

Through multiple strategies, therefore, the Indian pharmaceutical sector is looking to expand and continue to grow into a major global supplier of medicines and vaccines to the world.

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