Revamping India’s Pharmaceutical Landscape

• 11 Jun 2025

This editorial is based on “Pharma opportunity” which was published in The Hindu on 10/06/2025. The article brings into picture the strategic importance of India’s $50 billion pharmaceutical industry, exempted from US tariffs, underscoring its global healthcare role and potential for innovation-driven growth.

For Prelims:  Generic medicines, Central Drugs Standard Control Organisation, National Pharmaceutical Pricing Authority, Antimicrobial Resistance, Pradhan Mantri Jan Aushadhi Kendras,  Indian Council of Medical Research,  Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 , Production-Linked Incentive.  

For Mains: Current Regulatory Framework Governing the Pharmaceutical Sector in India, Key Factors Driving the Growth of India’s Pharmaceutical Sector, Key Issues Confronting India’s Pharmaceutical Sector.

India's pharmaceutical industry, valued at $50 billion in 2024 and projected to reach $130 billion by 2030, stands as a global powerhouse in affordable medicine supply. Despite recent widespread reciprocal tariffs imposed by the US administration affecting various sectors, pharmaceuticals have received crucial exemptions, highlighting the sector's strategic importance. This exemption from trade tensions underscores India's indispensable role in maintaining affordable healthcare globally while presenting opportunities for further growth through innovation and quality enhancement. 

What is the Current Regulatory Framework Governing the Pharmaceutical Sector in India? 

• Central Drugs Standard Control Organization (CDSCO): The CDSCO, under the Ministry of Health and Family Welfare, is the apex regulatory body responsible for ensuring the quality, safety, and efficacy of pharmaceuticals in India.  
  • It oversees the approval of new drugs, clinical trials, manufacturing licenses, and the regulation of medical devices and cosmetics. 
  • CDSCO sets standards for drug testing and labeling, and is also involved in the implementation of Good Manufacturing Practices (GMP) for pharmaceutical production. 
• Drugs and Cosmetics Act, 1940: The Drugs and Cosmetics Act is the cornerstone of India’s pharmaceutical regulatory framework.  
  • It governs the manufacture, sale, and distribution of drugs, cosmetics, and medical devices in the country. 
  • It ensures that only drugs meeting safety and efficacy standards are approved and sold in the market.  
• National Pharmaceutical Pricing Authority (NPPA): The NPPA is a government agency responsible for regulating the prices of essential medicines in India.  
  • It ensures that essential drugs are available at affordable prices to the public, and that manufacturers and suppliers do not exploit the market. 
  • The NPPA regularly revises the prices of medicines under the National List of Essential Medicines (recently increased by 1.74%) and ensures compliance with price control mechanisms.  
• State Drugs Control Authorities: In addition to the central authorities, individual states in India have their own Drugs Control Departments, which are responsible for the enforcement of drug laws at the regional level.  
• Regulation of Clinical Trials: Clinical trials in India are regulated by the CDSCO in compliance with the Drugs and Cosmetics Act, 1940.  
  • The Indian Council of Medical Research (ICMR) provides ethical guidelines for conducting clinical trials, which must adhere to Good Clinical Practice (GCP) standards 
• Pharmaceutical Advertising and Promotion: The regulation of pharmaceutical advertising and promotion is another crucial aspect of India’s pharma sector regulation. 
  • The Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 regulates the advertisement of drugs, ensuring that claims made in marketing are truthful and not misleading. 
• Recent Reforms: The Indian pharma sector has also witnessed several recent reforms aimed at improving regulatory efficiency.  
  • National Medical Devices Policy, 2023 and the Pharmaceutical Technology Upgradation Assistance Scheme focus on the development of critical medical devices and drugs. 

What are the Key Factors Driving the Growth of India’s Pharmaceutical Sector? 

• Cost Efficiency in Manufacturing: India’s pharmaceutical sector thrives due to its significant cost advantages in manufacturing.  
  • The country benefits from lower operational costs, including cheaper labor and raw materials, making it highly competitive in the global market.  
  • For example, India's pharmaceutical manufacturing costs are approximately 30-35% lower than those in the US and Europe.  
    • This pricing advantage supports India's position as the world's largest provider of generic drugs, contributing to nearly 20% of global exports. 
• Government Support and Policy Initiatives: Government support through various schemes like the Production-Linked Incentive (PLI) and the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) fuels growth.  
  • The Indian government has allocated Rs. 15,000 crore (US$ 2.04 billion) for the PLI scheme, aimed at boosting the sector’s manufacturing capacity. 
  • Additionally, the PMBJP has expanded to more than 15,000 Kendras, offering generic medicines at up to 80% lower prices, driving both accessibility and affordability. 
• Rising Global Demand for Generics: India's dominant position in the global generics market, especially in developed countries like the US, underpins its growth.  
  • Indian pharma companies account for 40% of the generic drugs consumed in the US, a market valued at over US$ 9 billion in 2024.  
  • Moreover, the US FDA has approved more than 262 Indian plants, the highest number outside the US, reflecting India's robust supply capabilities. 
• Advancements in Biotechnology and Biologics: The biotechnology segment in India, which includes biologics, biosimilars, and vaccines, is becoming a key growth driver. 
  • India's biosimilars market is expected to grow at a CAGR of 22%, reaching US$ 12 billion by 2025.  
  • Additionally, India supplies over 60% of the world’s vaccines, cementing its role in global healthcare innovation, especially in areas like cancer and diabetes treatments. 
• Expansion of International Markets: India's pharma sector continues to expand its international footprint, especially in regulated markets like the EU and Japan.  
  • With a growing number of facilities adhering to global standards, Indian companies are increasing their presence in these markets. 
  • In FY24, India's pharmaceutical exports reached US$ 27.82 billion, with exports to over 200 countries.  
• Foreign Direct Investment (FDI) and Global Partnerships: Foreign investment and international partnerships play a pivotal role in the growth of India’s pharmaceutical industry. The relaxation of FDI norms has encouraged more global investments in India’s pharma sector. 
  • India allows up to 100% FDI in Greenfield pharma projects and has attracted US$ 23.04 billion in FDI since 2000.  
  • Recent examples include Sanofi's USD 435 million investment in expanding its global capability center in Hyderabad, showcasing the growing global interest in India’s pharmaceutical potential. 
• Expansion of Medical Device and Digital Health Sectors: The convergence of pharmaceuticals, medical technology, and digital health is driving the growth of India’s healthcare sector.  
  • With advancements in medical devices and digital health solutions, India is expanding its healthcare ecosystem. 
  • India's medical technology market is expected to reach USD 50 billion by 2030, growing at a CAGR of 15%.  
    • Additionally, the Ayushman Bharat Digital Mission (ABDM) is transforming the healthcare landscape, facilitating digital health solutions and improving accessibility across the country. 

What are the Key Issues Confronting India’s Pharmaceutical Sector? 

• Quality Control and Regulatory Compliance: India faces ongoing challenges in maintaining consistent quality control and ensuring adherence to global regulatory standards.  
  • The rapid expansion of the pharma sector, combined with increasing competition, has sometimes led to lapses in quality standards. 
  • Despite having the highest number of USFDA-compliant plants outside the US, recent incidents such as the WHO’s alerts on Indian-made cough syrups point to potential gaps in compliance.  
• Intellectual Property and Patent Challenges: Intellectual property (IP) rights and patenting issues present significant challenges for India’s pharma sector, particularly in generics.  
  • India’s strong stance on compulsory licensing, as seen with the provision of generic antiretroviral drugs to countries like South Africa, has often led to tensions with global pharmaceutical giants.  
  • For instance, India has granted compulsory licenses for crucial cancer drugs, leading to legal battles with multinational companies that claim intellectual property rights violations. 
• Dependence on Imports for Active Pharmaceutical Ingredients (APIs): India remains highly dependent on imports for critical Active Pharmaceutical Ingredients (APIs), especially from China.  
  • This dependency poses a risk to supply chain stability, particularly in light of geopolitical tensions or disruptions in trade. 
  • Around 70-80% of India’s API imports come from China, which exposes the sector to significant supply chain risks.  
    • In 2021, disruptions in the global supply chain, particularly from China, caused shortages of essential APIs, highlighting the vulnerability in India’s pharmaceutical production capacity. 
• Over-Reliance on Generic Drugs: India's pharma industry is heavily dependent on generics, which makes up a large portion of its exports. 
  • While generics are crucial to global healthcare, over-reliance on them risks stifling innovation and long-term sustainability in the sector. 
  • Though generics constitute 40% of the US market, and India holds a 20% share in global generic exports, the industry needs to transition towards high-value products like biologics and specialty drugs.  
    • Despite this, India’s generic market dominance limits the sector’s ability to diversify and capture higher margins in the pharmaceutical value chain. 
• Talent Shortage and Skill Gaps: India’s pharma sector faces a growing shortage of skilled talent, especially in emerging areas like biologics, advanced therapies, and regulatory affairs.  
  • This talent gap impedes the industry’s ability to scale and innovate effectively. 
  • A PwC report shows that 43% of pharma companies face difficulties in digital transformation due to skill shortages. 
  • Additionally, with the sector aiming to hit US$ 450 billion by 2047, the demand for advanced expertise in R&D and clinical trials is expected to outstrip supply, posing a major bottleneck for growth. 
• Environmental Sustainability Issues: India’s pharmaceutical industry has significant environmental impacts, particularly concerning waste management, energy consumption, and carbon emissions from production facilities.  
  • As global sustainability standards rise, these issues need urgent attention. 
  • For instance, data from state pollution control boards and pollution control committees show that from the 656 tonnes of biomedical waste generated daily in 2020, only 590 tonnes a day were treated. 
    • It is contributing to the issue of rising Antimicrobial Resistance.  

What Measures can be Adopted to Revamp India's Pharma Sector? 

• Focus on Innovation and R&D Investment: To shift from a reliance on generics to high-value products, India must significantly ramp up its investment in research and development (R&D).  
  • Prioritizing innovation will allow Indian pharma to move into emerging therapeutic areas like biologics, biosimilars, and personalized medicine. 
  • Encouraging private sector partnerships with academic institutions can create synergies that foster groundbreaking research and result in new drug discoveries and technologies. 
• Strengthening API Manufacturing Capabilities: India must reduce its dependence on foreign imports, particularly from China, for Active Pharmaceutical Ingredients (APIs). 
  • Developing self-reliant API manufacturing ecosystems through government incentives, such as those in the PLI scheme, will safeguard the sector from supply chain disruptions. 
  • Establishing dedicated API parks and upgrading existing facilities to global compliance standards would also ensure that Indian-made drugs are consistently of high quality and competitively priced.  
• Implementation of Green and Sustainable Manufacturing Practices: Adopting greener, more sustainable manufacturing practices is essential for India’s pharmaceutical industry to meet global environmental standards and remain competitive. 
  • Embracing sustainable production methods will reduce energy consumption, waste, and carbon emissions, aligning with international sustainability goals. 
  • The adoption of eco-friendly technologies, such as renewable energy sources and zero-waste processes, should be incentivized.  
    • India can leverage its growing emphasis on environmental regulations to become a leader in eco-friendly pharma manufacturing, which will also boost its global reputation. 
• Expansion of Digital Health and AI Integration: India must fully integrate digital health technologies, including artificial intelligence (AI) and machine learning, into pharmaceutical research, production, and delivery systems.  
  • By utilizing AI, drug discovery and development processes can be expedited, and patient care can be personalized more efficiently. 
  • The use of AI-driven platforms to streamline drug development, clinical trials, and predictive analytics will not only increase operational efficiency but also help in identifying novel treatment pathways.  
    • Additionally, AI can enhance quality control, reduce errors, and improve overall supply chain management. 
• Public-Private Partnerships for Health Infrastructure: To meet both domestic and global demands, India should foster stronger public-private partnerships (PPPs) to enhance pharmaceutical infrastructure.  
  • Collaboration between the government, private pharma companies, and research institutions will provide the necessary infrastructure for scaling up production, distribution, and accessibility of essential drugs. 
  • Such partnerships will also enable better resource allocation for tackling emerging health challenges, improving healthcare access in rural areas, and accelerating the delivery of vaccines and critical treatments to underserved populations. 
• Skilling and Talent Development in Advanced Therapies: As the pharma industry advances into more complex drug development, India must invest heavily in skilling and talent development, particularly in cutting-edge areas like biologics and personalized medicine. 
  • Collaboration between academic institutions, pharma companies, and healthcare providers will be critical in developing a skilled workforce adept at handling new technologies.  
  • The government should offer incentives for companies that invest in upskilling employees in advanced pharmaceutical technologies, ensuring a sustainable talent pipeline for the future. 
• Revitalizing Domestic Pharmaceutical Market with Chronic Disease Focus: To cater to the rising burden of non-communicable diseases (NCDs) like diabetes, cardiovascular diseases, and cancer, India must refocus its domestic pharmaceutical market on chronic disease treatments. 
  • With NCDs rapidly becoming the leading cause of morbidity and mortality in India, pharma companies should prioritize research and production in these therapeutic areas.  
  • Shifting the focus to long-term, high-value therapies will not only meet domestic healthcare needs but also create export opportunities in the growing global chronic disease market. 
• Streamlining Access to Affordable Medicine: To ensure broader access to affordable medicines, particularly in rural and underserved regions, India must enhance distribution networks, including the expansion of the Jan Aushadhi Scheme and other government initiatives. 
  • By scaling up the reach of affordable medicine outlets, India can address both cost and accessibility issues that prevent many citizens from receiving timely care. 
• Promoting Next-Generation Pharma Technologies: India should invest in next-generation pharmaceutical technologies, such as cell-based therapies, and gene therapies, to move beyond generics and establish a leadership position in the global high-value drug market. 
  • Leveraging technological advancements such as CRISPR gene editing and RNA-based therapies will diversify India’s pharmaceutical offerings and open new global markets. 
  • This forward-thinking approach will position India as a hub for innovative therapies, enhancing its export profile and global competitiveness. 

Conclusion:  

India’s pharmaceutical sector stands at a defining moment, poised to evolve from being the "pharmacy of the world" to a global leader in high-value innovation. Strategic reforms in R&D, digital health, and skill development, backed by strong public-private collaboration, will be key to unlocking the sector’s next phase. With a vision rooted in self-reliance and global excellence, India is well-positioned to shape the future of affordable and cutting-edge healthcare worldwide. 

Drishti Mains Question:

India's pharmaceutical sector has emerged as a global leader in the supply of affordable medicines, yet it faces structural and strategic challenges in sustaining long-term growth 

UPSC Civil Services Examination, Previous Year Question (PYQ):  

Mains:

Q. How is the Government of India protecting traditional knowledge of medicine from patenting by pharmaceutical companies? (2019)