Few manufacturing industries in India have done as consistently well as the drug industry over the last four decades. The Indian drug industry is currently ranked the world’s third largest in pharmaceutical production by volume. The production has been increasing rapidly supported by rising domestic consumption and exports. The industry has been growing at a CAGR of 9.43 percent over the past nine years. Generic drugs, over-the-counter (OTC) medications, bulk drugs, vaccines, contract research and manufacturing, biosimilars, and biologics are some of the major segments of the industry. Lately, Hyderabad is fast emerging as India’s pharma industry hub. It accounts for 40 percent of the country’s total bulk drug production and 50 percent of bulk drug exports. Other major production centers include Vadodara, Ahmadabad, Ankleshwar, Vapi, Baddi, Sikkim, Kolkata and Visakhapatnam. The manufacturing network encompasses some 10,500 production units operated by some 3,000-odd pharmaceutical companies of all sizes — big, medium, and small.
So strong is India’s drug manufacturing network and its wide-ranging product portfolio that global drug giants such as Pfizer, Bayer, Merck, AstraZeneca, and GSK have gone in for joint ventures with some of the country’s major pharmaceutical producers to take advantage of the situation. These joint ventures target largely the domestic market and also export. Industry experts highlight the country’s unique blend of advanced drug-making infrastructure, its status as an emerging market, and its strong growth potential as underlying reasons why there is interest in accessing this market as early as possible. Indians are consuming medicines like never before. The country’s drug consumption is projected to grow nine to 12 percent over the next five years or so. This will lead India to become one of the world’s top 10 nations in terms of medical spending. The manufacturers are increasingly aligning their product portfolio towards chronic therapies for diseases such as cardiovascular, anti-diabetes, antidepressants, and cancers, which are on the rise with the changing lifestyles and increasing stress.
Today, the country’s drug industry is the world’s largest provider of generic medicines by volume and the world’s seventh-largest exporter of medicines. In 2020, India exported drugs worth USD 24.6 billion, running almost neck and neck with the United States (USD 24.7 billion), the world’s largest drug producer and consumer. India’s share of the global drug export market was 6.1 percent. Ahead of India and the US in the global drugs export market are five European countries. In 2020, Germany ranked No.1 with the export worth USD 60.8 billion, representing 14.9 percent of the global drug’s export, followed by Switzerland (USD 48.1 billion), Belgium (USD 31.1 billion), France (USD 28.4 billion), and Italy (USD 27.2 billion). In 1973, India’s total turnover in the area of bulk drug manufacturing was only worth Rs. 75 crore and drug formulations accounted for Rs. 370 crore. While the production in the organised sector was dominated by foreign drug manufacturers, the industry’s expenditure on research and development (R&D) was less than one percent of the turnover. However, to become a truly reliable pharmacy of the world, India needs to substantially reduce its dependence on China for the supply of active pharmaceutical ingredients (APIs). The self-reliance on APIs will help India realise its effort to become the pharmacy of the world producing cheap, high-quality drugs at every junction of the global value chain. This will help expand both the domestic market and exports by doubling the market size by 2030.
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