India’s Pharmaceutical Industry is a prime example of how good policy and rich talent can create. In the 1970s, the GOI introduced the Government’s Patents Act 1970 which recognized process patents, but not product patents. This meant that the patenting regime was focused solely on manufacturing, enabling domestic pharma companies to take advantage of the manufacturing process of drugs without paying royalty to the original patent holders.
According to Delloite, Pharmaceutical companies in India during 1970 stood at around 2200 which increased to 24,000 in 1995. The majority of India’s pharmaceutical firms are small with annual revenues of less than USD 5 million. The rise of the pharmaceutical companies led to an increase of Top Pharmacy Colleges in India to meet the industry’s demand.
In 2021, India’s domestic pharmaceutical market increased at 17.7% annually, up from 13.7% in July 2020. India is on course to reach a market size of USD 65 Billion by 2024 as compared to USD 42 Billion right now.
The Liberalisation of 1991 played a big role in the export capabilities of India’s pharmaceutical sector. The main export destinations are the USA, UK, Europe and various African countries. It supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value.
What is driving the growth?
India has a huge talent pool with trained pharmaceutical professionals having degrees in B Pharmacy, D Pharmacy, M Pharmacy. The ability of the pharmaceutical industry to develop generic drugs at a much reduced price is mainly due to trained professionals in the industry.
India has a huge manufacturing base of pharmaceutical products giving it way more flexibility in producing generic drugs. According to India Briefing, India is home to 3000 drug companies and more than 10,000 manufacturing units. Among them 2,000 units are WHO GMP approved; 253 are EDQM approved, 1,105 have Europe’s Certificate of Suitability (CEPs) and 584 sites are approved by the US FDA.
The rise of E-Pharmacy has large implications for the penetration of pharmaceutical products across the country. Although prescription drugs dominate the market with a 66% share according to research and markets, E-Pharmacy is growing at 21.28% every year. This is helping in market penetration since there has been a 45% increase in rural internet users who are active.
The Impact of Covid-19 on the Pharmaceutical Sector in India
Covid-19 is synonymous with lockdowns, supply chain disruption and a slowdown of business. But the pharmaceutical industry in India withstood the pandemic. It was quick to mobilize resources to deal with the supply chain disruptions despite the imposition of lockdowns and restrictions across the country.
India’s commitment and ability to produce high-quality, low-cost drugs on a massive scale helped the world fight the covid-19 pandemic. According to GlobalData Healthcare, Contract Service Agreements (CSA) increased from 130 in 2018 to 183 in 2019 which continued in the following year. Covid-19 cases in 2020 paved the way for large pharmaceutical companies to strike deals to outsource clinical research and manufacturing of anti-viral therapeutics and vaccines. Apart from CSAs strategic alliances, including licensing agreements and partnerships, increased by 40% from 2019 to 2020. About 30% of these deals were focused on Covid-19 specifically.
The pharmaceutical companies in India also invested in R&D screening, treatment and prevention of COVID-19 with the launch of indigenous testing kits, treatments, and vaccines.
Future of the Indian Pharmaceutical Industry
According to the Indian Economic Survey 2021, the pharmaceutical industry in India is expected to reach USD 120-130 Billion by 2030. The other industries related to the pharmaceutical sector like biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics are likely to reach USD 150 Billion in 2025 as compared to USD 70 Billion in 2020.
According to EY and FICCI, Innovation and R&D, Healthcare Delivery, Manufacturing & Supply Chain, and Market Access are the opportunities that will drive growth in the years to come. In terms of healthcare delivery, India still has huge potential in rural areas. In manufacturing, a PLI scheme has been launched worth INR 197,000 crore in 13 key sectors such as active pharmaceutical ingredients, drug intermediaries and key starting materials. India’s medical devices market is expected to reach USD 50 Billion in 2025 from USD 10.36 billion in FY20.
India still has a long way to go in terms of exports. The global pharmaceutical trade is expected to reach a size of USD 1-1.3 trillion by 2030, the ambition is to garner a global share of 6-7% from 2.5% right now. India needs to expand existing export corridors and develop new ones in order to reach the target.
The Indian Pharmaceutical Industry has been using its powers very responsibly. It has made a name for itself and India is being called “The Pharmacy of the World” in some circles. India has got its name mainly due to its dominance in the generic pharmaceutical sector and vaccines. The only weakness is the lack of dominance in the high value drugs. Although India ranks 3rd when it comes to the volume of exports, it is at the 14th spot when it comes to the value of exports. India needs to focus on manufacturing high value pharmaceutical products in order to become the true “Pharmacy of the World”. It must be noted that China came to be known as “The Factory of the World” only after manufacturing high value products.
