Overview of Indian Pharmaceutical Industry 2023
India is the largest provider of generic drugs globally and is known
for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is
currently ranked third in pharmaceutical production by volume after evolving over time
into a thriving industry growing at a CAGR of 9.43% since the past nine years. Generic
drugs, over-the-counter medications, bulk drugs, vaccines, contract research &
manufacturing, biosimilars, and biologics are some of the major segments of the Indian
pharma industry. India has the most number of pharmaceutical manufacturing facilities that
are in compliance with the US Food and Drug Administration (USFDA) and has 500 API
producers that make for around 8% of the worldwide API market.
Indian pharmaceutical sector supplies over 50% of global demand for
various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. The
domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500
manufacturing units. India enjoys an important position in the global pharmaceuticals
sector. The country also has a large pool of scientists and engineers with a potential to
steer the industry ahead to greater heights. Presently, over 80% of the antiretroviral
drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by
Indian pharmaceutical firms. India is rightfully known as the "pharmacy of the
world" due to the low cost and high quality of its medicines.
Indian pharmaceutical industry is known for its generic medicines and
low-cost vaccines globally. Transformed over the years as a vibrant sector, presently
Indian
Pharma ranks third in pharmaceutical production by volume. The
Pharmaceutical industry in India is the third largest in the world in terms of volume and
14th largest in terms of value. The Pharma sector currently contributes to around 1.72% of
the countrys GDP.
According to a recent EY FICCI report, as there has been a growing
consensus over providing new innovative therapies to patients, Indian pharmaceutical
market is estimated to touch US$ 130 billion in value by the end of 2030. Meanwhile, the
global market size of pharmaceutical products is estimated to cross over the US$ 1
trillion mark in 2023.
Market size :
Market size of India pharmaceuticals industry is expected to reach US$
65 billion by 2024, and ~US$ 130 billion by 2030. According to the government data, the
Indian pharmaceutical industry is worth approximately US$ 50 billion with over US$ 25
billion of the value coming from exports. About 20% of the global exports in generic drugs
are met by India.
India is among the top 12 destinations for biotechnology worldwide and
3rd largest destination for biotechnology in Asia Pacific. In 2022, Indias
Biotechnology industry has crossed US$ 80.12 billion, growing 14% from the previous year.
The Indian pharmaceutical industry has seen a massive expansion over
the last few years and is expected to reach about 13% of the size of the global pharma
market while enhancing its quality, affordability, and innovation.
The biosimilars market in India is estimated to grow at a compounded
annual growth rate (CAGR) of 22% to become US$ 12 billion by 2025. This would represent
almost 20% of the total pharmaceutical market in India.
India is the 3rd largest producer of API accounting for an 8% share of
the Global API Industry. About 500+ different APIs are manufactured in India, and it
contributes 57% of APIs to prequalified list of the WHO.
The current market size of the medical devices sector in India is
estimated to be US$ 11 billion and its share in the global medical device market is
estimated to be 1.5%.
Indian pharma companies have a substantial share in the prescription
market in the US and EU. The largest number of FDA-approved plants outside the US is in
India.
According to the Indian Economic Survey 2021, the domestic market is
expected to grow 3x in the next decade. Indias domestic pharmaceutical market stood
at US$ 42 billion in 2021 and is likely to reach US$ 65 billion by 2024 and further expand
to reach US$ 120-
130 billion by 2030. Indias biotechnology industry comprises
biopharmaceuticals, bio-services, bio- agriculture, bio-industry, and bioinformatics. The
Indian biotechnology industry was valued at US$ 70.2 billion in 2020 and is expected to
reach US$ 150 billion by 2025. Indias medical devices market stood at US$ 10.36
billion in FY20. The market is expected to increase at a CAGR of 37% from 2020 to 2025 to
reach US$ 50 billion. As of August 2021, CARE Ratings expect Indias pharmaceutical
business to develop at an annual rate of
~11% over the next two years to reach more than US$ 60 billion in
value.
In the global pharmaceuticals sector, India is a significant and rising
player. India is the worlds largest supplier of generic medications, accounting for 20%
of the worldwide supply by volume and supplying about 60% of the global vaccination
demand. The Indian pharmaceutical sector is worth US$ 42 billion worldwide. In August
2021, the Indian pharmaceutical market increased at 17.7% annually, up from 13.7% in July
2020. According to India Ratings & Research, the Indian pharmaceutical market revenue
is expected to be over 12% Y-o-Y in FY22.
Exports:
Pharmaceutical is one of the top ten attractive sectors for foreign
investment in India. The pharmaceutical exports from India reach more than 200 nations
around the world, including highly regulated markets of the USA, West Europe, Japan, and
Australia. India supplied around 45 t o n n e s a n d 4 0 0 m i l l i o n t a b l e t s o
f hydroxychloroquine to around 114 countries globally.
Indias drugs and pharmaceuticals exports stood at Rs. 2,08,231
crore (US$ 25.3 billion) for FY23, as per the data by Pharmexcil.
Exports of Drugs & Pharmaceuticals was estimated to be at US$ 2.48
billion in March, 2023 and shared 6.47% of the total exports of the month.
India is the 12th largest exporter of medical goods in the world.
Indian drugs are exported to more than 200 countries in the world, with US being the key
market. Generic drugs account for 20% of the global export in terms of volume, making the
country the largest provider of generic medicines globally. Indian drug &
pharmaceutical exports stood at US$ 24.60 billion in FY22 and US$ 24.44 billion in FY21.
Indian drug & pharmaceutical exports stood at US$ 2.19 billion in September 2022.
Investments And Recent Developments
The Indian Pharmaceuticals industry plays a prominent role in the
global pharmaceuticals industry. India ranks third worldwide for production by volume and
14th by value.
In this regard the sector has seen a lot of investments and
developments in the recent past.
Up to 100%, FDI has been allowed through automatic route for Greenfield
pharmaceuticals projects. For Brownfield pharmaceuticals projects, FDI allowed is up to
74% through automatic route and beyond that through government approval.
The cumulative FDI equity inflow in the Drugs and Pharmaceuticals
industry is US$ 21.22 billion during the period April 2000-December 2022. This constitutes
almost 3% of the total FDI inflow received across sectors.
The FDI inflows in the Indian drugs and pharmaceuticals sector reached
US$ 19.90 billion between April 2000-June 2022.
The Indian drugs and pharmaceuticals sector received cumulative FDIs
worth US$ 19.41 billion between April 2000-March 2022.
The foreign direct investment (FDI) inflows in the Indian drugs and
pharmaceuticals sector reached US$ 1,414 million between in FY 2021-22.
The Indian pharmaceutical industry generated a trade surplus of US$
15.81 billion in FY22.
Medical Device industry is expected to reach US$ 50 billion by 2030
growing at a CAGR of 15%.
The Union Cabinet has given its nod for the amendment of existing
Foreign Direct Investment
(FDI) policy in the pharmaceutical sector in order to allow FDI up to
100% under the automatic route for manufacturing of medical devices subject to certain
conditions.
The National Digital Health Blueprint has the potential to generate
nearly US$ 200 billion in added economic value for Indias healthcare industry over the
next 10 years.
Government Initiatives
Some of the initiatives taken by the Government to promote the
pharmaceutical sector in India are as follows:
As per the Union Budget 2023-24:
A mission to eliminate sickle cell anemia by 2047 will be launched. It
would involve raising awareness, conducting a comprehensive screening of seven crore
individuals in the impacted tribal regions between the ages of 0 and 40, and providing
counselling through coordinated efforts.
For innovation in the pharmaceutical sector, through centres of
excellence, a new initiative to encourage pharmaceutical research and innovation will be
implemented. The government persuades business to spend money on R&D in a few chosen
priority fields. At the grassroots level, government has also announced on building 157
nursing colleges in co-location with government medical colleges.
The Union Cabinet, on April 26, 2023, approved the National Medical
Devices Policy, 2023. The National Medical Devices Policy, 2023 is expected to facilitate
an orderly growth of the medical device sector to meet the public health objectives of
access, affordability, quality and innovation.
Ayushman Bharat Digital Mission (ABDM):
Under the ABDM, citizens will be able to create their ABHA (Ayushman
Bharat Health Account) numbers, to which their digital health records can be linked. This
will enable creation of longitudinal health records for individuals across various
healthcare providers and improve clinical decision
making by healthcare providers.
The pilot of ABDM is completed in the six Union Territories of Ladakh,
Chandigarh, Dadra & Nagar Haveli and Daman & Diu, Puducherry, Andaman and Nicobar
Islands and Lakshadweep with successful demonstration of technology platform developed by
the NHA.
During the pilot, digital sandbox was created in which more than 774
partner solutions are undergoing integration. As on February 21, 2022, 173,369,087
Ayushman Bharat Health Accounts have been created and 10,114 doctors and 17,319 health
facilities have been registered in ABDM.
Scheme for Development of Pharma industry – Umbrella Scheme:
The Department of Pharmaceuticals has prepared an Umbrella Scheme
namely ‘Scheme for Development of Pharma industry. Which comprises of the
following sub schemes:
Assistance to Bulk Drug Industry for Common Facilitation Centres
Assistance to Medical Device Industry for Common Facilitation Centres
Assistance to Pharmaceutical Industry (CDP-PS)
Pharmaceutical Promotion and Development Scheme (PPDS)
Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS)
As per the Union Budget 2022-23:
Rs. 3,201 crore (US$ 419.2 million) has been set aside for research and
Rs. 83,000 crore (US$ 10.86 billion) has been allocated for the Ministry of Health and
Family Welfare.
Rs. 37,000 crore (US$ 4.83 billion) has been allocated to the National
Health Mission.
Rs. 10,000 crore (US$ 1.28 billion) has been allocated to Pradhan
Mantri Swasthya Suraksha Yojana.
The Ministry of AYUSH has been allocated
Rs. 3,050 crore (US$ 399.4 million), up from Rs. 2,970 crore (US$ 389
million).
In March 2022, under the Strengthening of Pharmaceutical Industry (SPI)
Scheme, a total financial outlay of Rs. 500 crore (US$ 665.5 million) for the period FY22
to FY26 were announced.
India could restart deliveries of COVID-19 shots to global
vaccine-sharing platform COVAX in November-December 2021 for the first time since April
2021. The World Health Organization (WHO), which co-leads COVAX, has been pushing India to
resume supplies for the programme, particularly after it sent ~4 million doses to
neighbours and allies in October 2021.
In November 2021, PM Mr. Narendra Modi inaugurated the first Global
Innovation Summit of the pharmaceuticals sector. The summit will have 12 sessions and over
40 national and international speakers deliberating on a range of subjects including
regulatory environment, funding for innovation, industry-academia collaboration and
innovation infrastructure.
In August 2021, Union Health Minister, Mr. Mansukh Mandaviya announced
that an additional number of pharmaceutical companies in India are expected to commence
manufacturing of anti- coronavirus vaccines by October-November 2021. This move is
expected to further boost the vaccination drive across the country.
In June 2021, Finance Minister Ms. Nirmala Sitharaman announced an
additional outlay of Rs. 197,000 crore (US$ 26,578.3 million) that will be utilised over
five years for the pharmaceutical PLI scheme in 13 key sectors such as active
pharmaceutical ingredients, drug intermediaries and key starting materials.
To achieve self-reliance and minimise import dependency in the
countrys essential bulk drugs, the Department of Pharmaceuticals initiated a PLI scheme
to promote domestic manufacturing by setting up greenfield plants with minimum domestic
value addition in four separate ‘Target Segments with a cumulative outlay of
Rs. 6,940 crore (US$ 951.27 million) from FY21 to FY30.
In May 2021, under Atmanirbhar Bharat 3.0, Mission COVID Suraksha was
announced by the Government of India to accelerate development and production of
indigenous COVID vaccines. To augment the capacity of indigenous production of Covaxin
under the mission, the Department of Biotechnology, Government of India, provided
financial support in the form of a grant to vaccine manufacturing facilities for enhanced
production capacities, which is expected to reach >10 crore doses per month by
September 2021.
Road Ahead
The pharmaceutical industry in India is a significant part of the
nations foreign trade and offers lucrative potential for investors. Millions of people
around the world receive affordable and inexpensive generic medications from India, which
also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP)
standards set by the World Health Organization (WHO) and the United States Food and Drug
Administration (USFDA). Among nations that produce pharmaceuticals, India has long held
the top spot. Medicine spending in India is projected to grow 9- 12% over the next five
years, leading India to become one of the top 10 countries in terms of medicine spending.
Going forward, better growth in domestic sales would also depend on the ability of
companies to align their product portfolio towards chronic therapies for diseases such as
such as cardiovascular, anti- diabetes, anti-depressants and anti-cancers, which are on
the rise. The Indian Government has taken many steps to reduce costs and bring down
healthcare expenses. The National Health Protection Scheme, which aims to offer universal
healthcare, the ageing population, the rise in chronic diseases, and other government
programmes, including the opening of pharmacies that offer inexpensive generic
medications, should all contribute to boost the Indian pharmaceutical industry. Speedy
introduction of generic drugs into the market has remained in focus and is expected to
benefit the Indian pharmaceutical companies. In addition, the thrust on rural health
programmes, lifesaving drugs and preventive vaccines also augurs well for the
pharmaceutical companies remained in focus and is expected to benefit the Indian
pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving
drugs and preventive vaccines
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