India’s Pharma Industry

• 12 Mar 2025

For Prelims: Pharmaceutical, Section 3(d), Patents Act, 1970, Generic Drug, Biotechnology Sector, Active Pharmaceutical Ingredients (APIs), Production-Linked Incentive (PLI) Scheme, Promotion of Bulk Drug Parks Scheme, Good Manufacturing Practice (GMP), National List of Essential Medicines (NLEM), mRNA Vaccine.  

For Mains: Opportunities and challenges in India’s pharmaceutical industry.  

Source: FE 

Why in News?

The Indian Pharmaceutical Alliance (IPA) has proposed zero customs duty on US medicine imports to prevent reciprocal US tariffs and maintain India's dominance in the American pharmaceutical market. 

Why is the IPA Advocating for Zero Import Duties? 

• Importance of US Market: The US imports USD 9 billion worth of pharmaceutical formulations from India annually, making up one-third of India's total pharma exports. 
• Zero Import Duties: India has minimized import duties on life-saving medicines. A zero-duty policy helps counter reciprocal US tariffs and safeguard exports. 
  • Lower duties strengthen trade ties and prevent strict US measures against Indian pharma like amending India’s Patents Act, 1970 to dilute its Section 3(d).  
• Amending Patent Act, 1970: The US and other western countries urge India to remove or dilute Section 3(d) of the Patents Act, 1970 which prevents evergreening of patents. 
  • Amending Section 3(d) to allow easier patenting of modified drugs (evergreening of patents) could threaten Indian pharma companies by restricting reverse engineering and delaying generic drug production. 

What is the Status of India's Pharmaceutical Industry? 

• About: India ranks 3rd globally in pharmaceutical production by volume and 14th largest in terms of value, supplying over 50% of global vaccine demand and 40% of generic medicines in the US. 
• Size: India's pharmaceutical market for FY 2023-24 is valued at USD 50 billion, contributing around 1.72% to the GDP, and is projected to reach USD 130 billion by 2030. 
  • India’s biotechnology sector, valued at USD 137 billion in 2022, aims for USD 300 billion by 2030. 
• Key Segments: 
  • Generic Medicines: India is the world’s largest supplier, meeting 20% of global demand. 
  • Active Pharmaceutical Ingredients (APIs): India produces over 500 APIs, contributing 8% to the global API market. 
  • Medical Devices: The market is projected to grow from USD 11 billion to USD 50 billion by 2030. 
• Growth Drivers:  
  • Affordable Pricing: Indian drugs are significantly cheaper than Western alternatives. 
  • Government Support: Policies such as the Production-Linked Incentive (PLI) scheme promote domestic manufacturing. 
  • Strong R&D Base: India has a large pool of scientists and engineers driving innovation e.g., India now ranks 6th globally in terms of patent applications, with 64,480 patent filings in 2023. 
  • Increasing Global Demand: Rising chronic diseases and an aging global population fuel demand for cost-effective medicines. 
• Exports: India exports medicines to over 200 nations, with FY24 exports reaching USD 27.82 billion. 
  • India ranks 12^th globally in medical goods exports, driven by rising demand for biosimilars and specialty drugs. 
• Government Initiatives: Production Linked Incentive Scheme (PLI), Promotion of Bulk Drug Parks Scheme, National Medical Device Policy 2023. 

Note: APIs are the biologically active components in a drug that produce the intended therapeutic effect. They are the key ingredients responsible for treating or managing a medical condition. 

What Challenges Does the Pharma Industry Face? 

• Quality Issues: Concerns over the quality of Indian medicines have emerged due to incidents like the Gambia cough syrup deaths in 2022. 
• Regulatory Hurdles: Compliance with evolving Good Manufacturing Practice (GMP) and quality control regulations is costly. 
• Dependence on API Imports: India imports 70% of APIs, primarily from China, creating supply chain vulnerabilities. 
• Pricing Pressures: Strict price controls under National List of Essential Medicines (NLEM), impact the profitability of pharma companies hindering innovation incentives for Industry. 
• Global Competition: There is rising competition from China, the US, and the EU (highly sophisticated and well researched products), while Vietnam and Indonesia emerge as manufacturing hubs. 
• Skill Shortage: There is a lack of trained professionals in biotechnology, biosimilars, and drug discovery. 
  • E.g., dependence on generic drugs rather than innovative formulations affects global competitiveness. 

Way Forward 

• Domestic API Manufacturing: PLI 2.0, bulk drug parks, fermentation-based APIs, and green chemistry can strengthen API production, ensuring self-reliance and supply stability.  
• Expanding High-Value Drug Markets: Indian firms should expand R&D in gene therapies, personalized medicine, and mRNA and next-gen vaccines to tap into growing specialty therapy opportunities. 
• Enhancing R&D: R&D incentives through tax benefits, research grants, and public-private partnerships (PPPs), AI-driven drug discovery, big data in clinical
• trials, and telemedicine will boost innovation and patient outcomes. 
• Regulatory & Quality Compliance: Faster approvals for biosimilars, innovative drugs, and breakthrough therapies will improve time-to-market. 
  • Enhancing drug safety monitoring will boost consumer trust and regulatory credibility. 
• Global Market Penetration: Expanding exports to Africa, Latin America, and ASEAN via trade deals and overseas manufacturing will overcome trade barriers and boost growth. 

Conclusion 

India’s pharmaceutical industry is poised for strong growth, driven by exports, affordability, and government support. However, challenges like API dependence, regulatory hurdles, and global competition must be addressed. Strengthening R&D, domestic API production, and global market penetration will ensure India’s continued leadership in the global pharmaceutical sector. 

Drishti Mains Question: 

Evaluate India's role as the 'Pharmacy of the World.' What factors contribute to its leadership, and what challenges does it face?

UPSC Civil Services Examination, Previous Year Question (PYQ) 

Prelims 

Q. Which of the following are the reasons for the occurrence of multi-drug resistance in microbial pathogens in India? (2019) 

1. Genetic predisposition of some people
2. Taking incorrect doses of antibiotics to cure diseases
3. Using antibiotics in livestock farming
4. Multiple chronic diseases in some people

Select the correct answer using the code given below. 

(a) 1 and 2  

(b) 2 and 3 only 

(c) 1, 3 and 4  

(d) 2, 3 and 4 

 Ans: (b)

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Mains 

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