* By Dr Maheep, a leading analyst in international relations and global politics. He contributes articles on critical humanitarian issues of utmost importance.
India has become the leading supplier of medicines to Russia, overtaking Germany. This is due to a 3% increase in Indian exports in 2023, reaching 293 million packages, while German exports dropped by 20%. Other countries like UAE, Armenia and Cuba are also entering the Russian market to fill the gap left by European countries like the UK and Poland.
Earning the nickname "The Pharmacy of the World," India's pharmaceutical industry is a major player in providing affordable, high-quality generic drugs around the globe. Generic medications comprise the lion's share of their production at 71%, with over-the-counter and brand-name drugs following behind. This focus on generics has solidified India's position as the world's largest supplier, exporting over $25 billion of pharmaceuticals in 2023. Their impact is even more significant by volume, accounting for 20% of all generic drugs exported globally, with North America being the biggest recipient.
Many medications come in two forms: generic and non-generic (also called brand-name). Both contain the same active ingredient, the part responsible for the medicine's effect. The key difference lies in their development process.
When a new medication is invented (non-generic), the company can apply for a patent to protect their discovery for a set period. This allows them to recoup the costs of research and development. Once the patent expires, other companies can create generic versions of the medicine. These generics must undergo strict approval processes to ensure they meet the same safety and quality standards as the original.
Interestingly, the same company that created the brand-name drug can also manufacture the generic version after the patent expires, or other firms can step in and produce it.
The Indian pharmaceutical industry is a major player on the world stage. According to the Indian Brand Equity Foundation (IBEF), India accounts for 3.5% of the global market by value and 20% by volume. This translates to India exporting medicines to over 200 countries, with key destinations like the US, UK, Russia and South Africa. India leads the world in generic drug exports. It is a crucial supplier of vaccines, providing over 60% of global demand and a substantial portion of medications for the US and UK.
Not only is India a major producer of affordable medicines and Active Pharmaceutical Ingredients (APIs) used worldwide, but it has also played a crucial role in the fight against COVID-19. Indian companies manufactured vaccines like Covishield and Covaxin, and through initiatives like COVAX, these life-saving medications have reached numerous countries. This demonstrates India's commitment to research and development, with significant investments in this area and its robust regulatory system that ensures adherence to international standards.
India's pharmaceutical industry has recently experienced impressive growth. Over the past decade, exports of drugs and pharmaceuticals have surged by 125%, reaching ₹2,04,110 crore in 2022-23, compared to ₹90,415 crore in 2013-14. This sector makes up a significant portion (5.71%) of India's overall exports.
India has a long history of providing essential medications at accessible prices worldwide. The Indian pharmaceutical industry is a major player, boasting a current market size of about US$50 billion. This success can be attributed to several factors. Firstly, India has a strong infrastructure for pharmaceutical production, with facilities meeting the high standards set by the US FDA and WHO. Secondly, India benefits from lower production costs – between 40-70% less expensive than developed nations – due to a combination of inexpensive labour and efficient processes. Labour costs alone are 60-70% lower in India. Finally, research and development costs are also lower in India. Seven Indian pharmaceutical companies rank among the top 100 globally by revenue. Sun Pharma leads the pack, followed by Aurobindo Pharma, Cipla, Dr Reddy's Laboratories, and Lupin.
Beyond pharmaceuticals, India is a leader in vaccine production. It's the world's largest vaccine producer, accounting for 60% of global output, and is a major supplier of affordable vaccines. India is also the world's biggest provider of generic medicines, holding a 20% share of the global market by volume. This commitment to global health is further exemplified by the Vaccine Maitri initiative, through which India has supplied over 298 million COVID-19 vaccines to nearly 100 countries.
India devised various schemes and plans to insulate its supply chain from global vagaries and dependence on a single country to obtain Active Pharmaceutical Ingredients for large-scale medicine making. The Indian government is heavily invested in strengthening its pharmaceutical industry. They've allocated Rs. 500 crores to improve existing infrastructure. A key strategy is the Production Linked Incentive scheme, which aims to attract investment and boost production. This scheme hopes to generate a massive Rs. 2,94,000 crores in additional sales within six years. The government also supports industry promotion through the Pharmaceutical Promotion and Development Scheme, which offers financial aid for events like conferences and exhibitions. To help small and medium businesses compete globally, the Pharmaceutical Technology Upgradation Assistance Scheme was launched. This sub-scheme, part of the Strengthening of Pharmaceutical Industry initiative, helps SMEs meet WHO quality standards. Finally, the Pradhan Mantri Bhartiya Janaushadhi Pariyojana programme ensures everyone can access affordable generic medicines. India has become self-sustainable in critical API making, and its medical exports are expected to reach ₹75,000 crore shortly.
With over 12,000 pharmaceutical companies, India is undeniably a pharmaceutical industry powerhouse globally. Vital to this sector are bulk drugs. India has accomplished an impressive feat by diminishing its dependency on imported medicines, APIs, and medical devices and emerging as a significant exporter of these products. This achievement is partly attributed to the PLI scheme. Notably, dormant for three decades, Penicillin G production is poised to restart in India shortly.
India is already a major player in the generic drug market, known for its high-quality and affordable products. This success is built on decades of innovation, resulting in a nearly 6% share of the global pharmaceutical export market. With government support, India has the potential to become a major exporter of Active Pharmaceutical Ingredients (APIs), the raw materials used to make drugs. The generic industry, in particular, is expected to keep growing at a rate of 8-10% in the coming year, driven by both domestic expansion and a rise in exports to countries with stricter regulations (like the US, Europe, and Canada). This would further strengthen India’s position in the global pharmaceutical industry.
Industry experts believe that the next wave of growth, both domestically and in exports, will depend on advancements in several areas. These include improving the workforce's skills, incorporating new technologies into manufacturing processes, and building a robust supply chain.
India's pharmaceutical industry is on a promising path, showcasing its strong manufacturing base and ability to adapt to global market demands. However, this journey is not without hurdles. Indian pharma exporters face several challenges that could slow down their growth.
One major obstacle is complying with strict regulations, especially those set by the US Food and Drug Administration (USFDA). These regulations often involve lengthy and complex approval processes, leading to delays and significant costs for exporters.
Another concern is the threat of counterfeiting and weak intellectual property protection. This damages the reputation of Indian-made pharmaceuticals and poses health risks. The ever-changing international regulatory landscape also requires constant monitoring and adjustments, adding to the compliance burden.
Logistical challenges also exist in the form of supply chain disruptions, the need for temperature-controlled transportation, and complex export procedures. Financially, high research and development costs, limited access to capital (especially for small and medium enterprises), and intense competition in price-sensitive markets create roadblocks.
The emergence of quality control as a critical concern underscores the need for immediate action. Subpar manufacturing practices, inadequate testing procedures, and regulatory gaps not only jeopardise patient safety but also tarnish the industry's image and economic viability.
To tackle these challenges, a comprehensive strategy is imperative. This involves embracing Good Manufacturing Practices (GMP), leveraging cutting-edge technologies, and conducting regular audits. Investment in modern testing facilities, stringent testing protocols, and robust training for personnel is paramount. Strengthening regulatory enforcement and adopting a Quality by Design (QbD) approach is also crucial to ensuring quality across the drug development process.
The Indian pharmaceutical industry stands at a crossroads. It has immense growth potential, but significant challenges stand in its way. The industry's future success hinges on effectively addressing these challenges, particularly in quality control and regulatory compliance. A collaborative effort among industry stakeholders, the government, and regulatory bodies is essential to maintaining and enhancing India's position as a global pharmaceutical leader. This will ensure sustainable economic growth and solidify the country's reputation for quality and reliability in the international market.
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