Indian pharmaceutical industry enjoys a significant global presence and has witnessed notable growth over the last few years. India is the largest supplier of generic medicines in the world, occupying a 20% share in global supply. It is the third largest in the world in terms of pharmaceutical production by volume and ranks 14th by value.
As per estimates of the Economic Survey 2021, the Indian pharma sector was valued at US$ 41 billion and is expected to grow to US$ 65 billion by 2024 and around US$ 120-130 billion by 2030.
With a strong network of more than 10,500 manufacturing facilities and more than 3000 pharma companies, India holds the record of having the highest number of US-FDA compliant pharma plants outside of USA.
India is also the largest producer of vaccines in the world and supplies 62% of global demand for vaccines. Presently, it is among the top 12 biotechnology destinations in the world and accounts for around 3% of the global biotech industry. The sector also plays a critical role in the global vaccine market as India leads the world supply of DPT, BCG and measles vaccines, among others.
India is also quickly emerging as a leading innovator in biosimilar production. It was among one of the first countries in the world to approve and market a biosimilar in 2000, following which more than 98 biosimilars were approved in India through September 2019.
Over the five-year period between 2019-2025, the Indian biologics market is expected to grow at a CAGR of 22% to reach US$ 12 billion by 2025. Thus, together with biosimilars, the biologics market presents a huge opportunity for India.
India is a major exporter of drugs and medicines and exports to more than 200 countries across the world including the USA, the UK, Canada, and the European Union, among others. Exports of India’s drugs and pharmaceuticals reached US$ 19.38 billion in FY 2020-21.
The Indian pharma sector has been the recipient of steady foreign direct investment (FDI) flows over the years. Between April 2000 and September 2021, the industry received cumulative FDI inflows worth around US$ 18.6 billion.
The Covid-19 pandemic has propelled the growth of the Indian pharma industry rapidly and presents several opportunities for higher growth in the future. India’s pharma exports as a share of its total exports registered a sharp increase during the pandemic which provided the opportunity for India to be known as the “pharmacy of the world”. A skilled workforce, a significant raw material base, deep technical capabilities, and rich scientific acumen are some of the primary drivers that have helped India to grow as a global hub for generic medicines and emerge as a successful centre for innovation.
At the same time, the Covid-19 pandemic also triggered a move towards expanding domestic manufacturing, particularly in the Active Pharmaceutical Ingredients (API) segment. India’s domestic API consumption is expected to reach around US$ 19 billion by FY 2022. The country’s import dependence on APIs has been very high, with more than 60% sourced from emerging markets. The sharp rise in the prices of APIs imported from China in recent years, combined with the supply shock as a result of supply chain disruptions in the aftermath of the Covid-19 pandemic, has been a cause of great concern for India. This in turn has made indigenous production of APIs an imperative. The Production Linked Incentive (PLI) schemes for various segments of the industry introduced by the Government in September 2020, aggregating support of over US$ 2 billion is a welcome move in this direction and will help strengthen domestic manufacturing.
While India is the third largest producer of pharmaceuticals in the world in terms of volume, it ranks 14th in terms of value, indicating that there is considerable scope for scaling up the value of production. It is important to consolidate the gains and take India’s pharmaceutical sector further up the value chain, with a focus on reducing import dependence in certain sectors and boosting indigenous production. In addition, although India’s share in global pharma exports has risen between 2011 and 2020, it still contributes less than 3% of global export value and the share has been stagnant in recent years. Given its skills to produce high volumes and meet stringent standards and norms in key global markets, the potential for further raising exports is significant. Identifying the right products which have high potential in international markets in terms of competitive advantage is critical in this regard. This in turn will help boost India’s exports, while also expanding global shares of its pharmaceutical products.
The article is from CII report on Boosting India’s Pharmaceutical Exports.
The publication analyses the competitive advantage of Indian pharmaceutical products with respect to the global pharmaceutical space. The report also identifies the potential export destinations for India in the world and provides a broad overview of the Indian pharma industry including recent trends.