Indian Pharmaceutical
Industry: Pharmacy of the
World
This presentation provides a comprehensive overview of the Indian
pharmaceutical industry, examining its remarkable growth, key segments,
and future opportunities. We will explore the unique strengths of this
sector, highlighting its role as a global healthcare leader, while also
addressing the challenges and strategic initiatives shaping its future
trajectory.
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Market Overview
Industry Overview Market Size and Growth
India's pharmaceutical industry has experienced robust The Indian pharmaceutical market is projected to reach USD
growth, establishing itself as a prominent player in the global 130 billion by 2030 and USD 450 billion by 2047. This growth
healthcare ecosystem. Ranking 3rd globally in is driven by factors such as rising healthcare expenditure,
pharmaceutical production by volume and 14th by value, increasing prevalence of lifestyle diseases, and a growing
India is recognized as the "Pharmacy of the World" for its population.
capacity to produce generic drugs and vaccines at
competitive costs.
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Structure of Pharmaceuticals Sector in India
Generic Drugs Biosimilars Active Pharmaceutical Ingredients (APIs)
The largest segment of the Indian pharmaceutical market, Estimated to grow to USD 12 billion by 2025, offering India is the 3rd largest global API producer, supplying 57%
driven by affordability and high export demand. cost-effective alternatives to expensive biologics. of the World Health Organization's prequalified APIs,
demonstrating its role in global drug production.
Contract Research and Manufacturing Services (CRAMS) Vaccines
A high-growth segment fuelled by outsourcing trends, with Indian companies providing India is a significant supplier of low-cost vaccines globally, meeting around 60% of global
research and manufacturing expertise to global pharmaceutical players. vaccine demand, making it a key player in global immunization programs.
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Growth Drivers
Supply-Side Drivers Demand-Side Drivers
• Cost Leadership: India's competitive advantage in cost- • Healthcare Access Expansion: Increasing investments in
effective manufacturing due to low labor costs and healthcare infrastructure, particularly in tier-2 and tier-3
operational efficiency. cities, drive the need for affordable healthcare solutions.
• Infrastructure: The industry boasts over 10,500
manufacturing units and 2,000 WHO-GMP-certified • Rising Population: India's expanding population, coupled
plants, indicating its robust manufacturing capacity. with increasing prevalence of lifestyle diseases and
• Patent Expiry: Opportunities for generic drug makers as chronic conditions, fuels demand for pharmaceutical
global patents expire, leading to increased market products.
access and competition. • Medical Tourism: Affordable treatments and high-quality
• Production Incentives: Government initiatives like the care attract international patients, boosting the
Production-Linked Incentive (PLI) scheme provide healthcare tourism sector.
financial incentives to boost API and bulk drug
production.
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Opportunities and Challenges
1 Clinical Trials 2 High-End Drugs 3 Rural Markets
India's diverse population and skilled Growing demand for specialty and The vast rural market offers untapped
workforce make it an attractive innovative therapies presents potential for generic and over-the-
destination for global clinical research, opportunities for Indian companies to counter (OTC) drugs, providing
offering potential for growth in this expand into high-value segments. opportunities for outreach and
sector. distribution expansion.
4 Digital Health 5 Regulatory Hurdles 6 Competition
The integration of technology into Navigating diverse international Increasing pressure from other low-cost
healthcare delivery, driven by initiatives compliance requirements poses a producers, particularly in APIs,
like the Ayushman Bharat Digital Mission, challenge for Indian companies, requiring necessitates strategies for maintaining
creates opportunities for innovation and a robust regulatory framework and competitiveness and market share.
service development. expertise.
7 R&D Funding
Historically lower R&D investment as a percentage of sales compared to global leaders poses a challenge for achieving long-term innovation
and market leadership.
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Government Initiatives
PLI Scheme Strengthening Pharmaceutical
Financial incentives for domestic
Industry (SPI)
manufacturing, aimed at boosting API and Support for MSMEs and pharma clusters
bulk drug production and reducing import to improve productivity and sustainability,
dependency. fostering a vibrant ecosystem of
pharmaceutical businesses.
Ayushman Bharat Scheme Investment in Medical Device
Expanded healthcare access to the rural
Parks
population, increasing demand for Creation of world-class infrastructure for
affordable healthcare solutions, including device manufacturing, supporting
pharmaceuticals. innovation and growth in the medical
device sector.
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Recent Trends and Investment Landscape
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Export Expansion
Indian pharmaceutical companies are expanding into new markets,
1
including Latin America, Africa, and ASEAN, driving export growth
M&A Activity
2
Mergers and acquisitions are increasing, enabling companies to enhance
product portfolios and expand their reach.
Biotech Innovation
3 Growth in biotech innovation and partnerships, particularly for vaccine development, is
driving breakthroughs and creating new opportunities
FDI Inflows
4 Significant FDI inflows, totaling USD 22.52 billion from April 2000 to March
2024, demonstrate investor confidence in the sector's growth potential
R&D Emphasis
5 Major players like Sun Pharma and Dr. Reddy's are increasing R&D spending,
fostering innovation and developing new products
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Policy Support from Government
PLI Scheme
1 The Production-Linked Incentive (PLI) Scheme provides substantial financial incentives to encourage domestic production of APIs, drug intermediates, and
medical devices.
National Medical Devices Policy
2 The National Medical Devices Policy, 2023, aims to develop world-class infrastructure for medical device manufacturing, promoting affordable
and accessible healthcare technology.
Ayushman Bharat Digital Mission (ABDM)
3 The ABDM facilitates digital health records for individuals, enabling data-driven clinical decision-making and strengthening
the overall healthcare ecosystem.
Strengthening Pharmaceutical Industry (SPI)
4 The SPI Scheme offers financial support to MSMEs and clusters, improving their productivity and
sustainability.
FDI Relaxation
5 Up to 100% FDI is allowed in greenfield projects and 74% in brownfield projects through
the automatic route, encouraging greater foreign investment.
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SWOT Analysis
Strengths Weaknesses
• Global Leadership in Generics: India contributes 20% of • Low R&D Spending: R&D investments as a percentage of
global generic drug exports, making it a key player in the sales are lower compared to global peers, impacting its
international market. long-term innovation potential.
• Cost Efficiency: Competitive manufacturing costs and • Regulatory Challenges: Complex domestic regulatory
economies of scale provide a cost advantage. landscape and compliance hurdles in key export markets
• Strong Manufacturing Base: Over 10,500 manufacturing pose challenges.
units and 2,000 WHO-GMP-certified facilities indicate its • Dependence on Imports: Heavy reliance on imports for
robust manufacturing capacity. APIs and key starting materials creates vulnerabilities in
• Skilled Workforce: The second-largest global biotech and supply chains.
pharmaceutical workforce provides a skilled and • Limited Patented Drug Portfolio: High dependence on
experienced workforce. generics limits profitability and market expansion
• R&D Capabilities: Increasing focus on innovation, opportunities.
particularly in vaccines, biologics, and biosimilars, is
enhancing its R&D capabilities.
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Opportunities and Threats
Opportunities Threats
• Biosimilars and Biologics: Rapid growth potential in high-value • Global Competition: Intense competition from countries like
markets, offering opportunities for expansion and market share China in APIs and generics requires strategies to maintain
gains. competitiveness and market share.
• Clinical Trials: Diverse genetic pool and skilled professionals • Price Controls: Domestic price regulations may impact
position India as a preferred destination for global clinical trials, profitability, necessitating strategies for navigating price
attracting investments and expertise. regulations.
• Digital Health Integration: Government initiatives like the • Geopolitical Risks: Export markets are sensitive to trade policies
Ayushman Bharat Digital Mission promote digital transformation in and global tensions, requiring strategies to mitigate risks and
healthcare, creating opportunities for innovation. diversify markets.
• Expansion in Emerging Markets: Growing demand in Africa, ASEAN, • Stringent Compliance: Increasing scrutiny from regulators like the
and Latin America provides potential for market expansion and US FDA poses risks for exports, requiring a robust compliance
increased market share. framework.
• High-End Specialty Drugs: Increasing demand for innovative
therapies driven by rising incomes and healthcare awareness
presents growth opportunities in higher-value drug segments.
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The Indian Pharmaceutical Sector: A
Vision for the Future
The Indian pharmaceutical industry stands as a global leader, acclaimed as the "Pharmacy of the World" for
its unparalleled ability to produce high-quality, cost-effective generics and vaccines. With strong
government support, increasing investments, and a rapidly evolving market landscape, the sector is poised
to grow from a USD 65 billion industry today to a projected USD 450 billion by 2047.
Key drivers such as cost leadership, expanding healthcare access, and digital health integration are
complemented by growing opportunities in biosimilars, clinical trials, and emerging markets. However, the
industry must address challenges like regulatory hurdles, low R&D spending, and dependence on API
imports to unlock its full potential.
With the right mix of innovation, strategic investments, and policy reforms, India is well-positioned to
redefine its pharmaceutical future and reinforce its pivotal role in global healthcare.
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