India’s pharma industry is the largest global supplier of generic drugs, and is recognized for its affordable vaccines and medications. It ranks third in the world by production volume and 14th by value, with ambitions to reach a market size of US$ 130 billion by 2030 and US$ 450 billion by 2047.
To support the sector, the Government of India launched the Production Linked Incentive (PLI) scheme in 2020 as part of the Self-Reliant India initiative, allocating Rs15,000 crore. This scheme has been highly successful, with over 50% of the country’s drug and pharmaceutical production exported last year.
The Indian pharma industry contributes around 2% to country’s GDP and generates employment for nearly 3.5 million people across the country. It is currently valued at US$ 50 billion and holds a significant position in the global pharmaceutical market, exporting to more than 200 countries. It accounts for 60% of the global vaccine supplies, serving about 70% of the WHO demand for Diphtheria, Tetanus and Pertussis (DPT) and Bacillus Calmette–Guérin (BCG) vaccines, and 90% of the WHO’s requirement for measles vaccine. India’s success in delivering affordable HIV treatment marks a transformative achievement in healthcare.
In addition, India is the world’s largest supplier of generic medicines and largest vaccine manufacturer. The country boasts the highest number of FDA-compliant pharmaceutical plants outside the US and hosts more than 3,000 pharmaceutical companies, supported by a vast network of over 10,500 manufacturing facilities and a highly skilled workforce. It manufactures around 60,000 unique generic brands spanning 60 therapeutic categories, representing 20% of the global generic supply.
During the COVID-19 pandemic and afterward, the sector showcased its innovation and solidified its role within the global pharmaceutical value chain. Known for their high quality and affordability, Indian medicines are globally trusted, cementing India’s status as the “Pharmacy of the world.”
Despite its progress, India continues to depend significantly on imports for key raw materials, particularly bulk drugs used in the production of finished dosage forms. To tackle this dependence, a committee on drug security, formed by the Department of Pharmaceuticals, reviewed the Active Pharmaceutical Ingredients (APIs) imported into India and identified 53 APIs on which the country is heavily reliant.
Subsequently, the Government of India approved the “Production Linked Incentive (PLI) Scheme for the promotion of domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates (DIs), and Active Pharmaceutical Ingredients (APIs)” on March 20, 2020.
This scheme aims to enhance self-reliance and reduce dependence on imports for critical APIs, with a financial allocation of Rs. 15,000 crores. The scheme seeks to augment India’s manufacturing capabilities, diversify product portfolios, and boost domestic production, running from 2020-2021 through 2028-29. It includes financial incentives for the production of specified pharmaceutical products under three categories:
Overseen by the Small Industries Development Bank of India (SIDBI), the scheme aims to foster innovation, R&D, and growth in the pharmaceutical sector, with MSMEs benefiting from anchor industry investments. The Department of Pharmaceuticals has introduced three supporting schemes: PLI for bulk drugs (1.0); PLI for pharmaceuticals (2.0); and Bulk drug parks scheme.
Under the PLI scheme, nearly 1800 pharmaceutical products and formulations and 22 bulk drugs will be manufactured in the country. Incentives under the scheme are linked to incremental sales. For Categories 1 and 2, rates are set at 10% for FY 2022-23 to FY 2025- 26, 8% for FY 2026-27, and 6% for FY 2027-28; rates for Category 3 are 5%, 4%, and 3% respectively.
India’s pharmaceutical exports play a vital role in the global healthcare landscape, serving over 200 countries. Major destinations for the India’s pharma exports include- US, Belgium, South Africa, UK, and Brazil. In the year 2023-24, the outbound shipments also entered new geographies like Montenegro, South Sudan, Chad, Comoros, Brunei, Latvia, Ireland, Chad, Sweden, Haiti and Ethiopia.
There are 500 API manufacturers contributing about 8% in the global API Industry. Notably, India provides more than 50% of Africa’s generic requirements, around 40% of the generic demand in the US, and nearly 25% of all medicines in the UK.
The drug and pharmaceutical exports from India have steadily increased over the years.
From US$ 15.1 billion in 2013-14, the drug and pharmaceutical exports of India soared to US$ 27.85 billion in FY24. In FY19 the pharma exports stood at US$ 20.70 billion. Post the implementation of PLI in 2020, the exports rose to US$ 24.6 billion in 2021, and further climbed to US$ 25.39 billion in FY23. However, a slight decline in export was registered in FY22.
In FY ’24, the USA accounted for the largest share (31.4%) in India’s total pharma exports, followed by UK (2.8%), South Africa (2.6%), Netherlands (2.5%) and France (2.4%).
While the export of Drug formulations, biologicals, increased from US$ 13.7 billion in FY ’19 to US$ 21.7 billion in FY 2024, the export of Bulk drugs, drug intermediates, witnessed an increase from US$ 3.4 billion in FY ’19 to US$ 4.8 billion in FY ’24.
India’s pharmaceutical sector is expected to see 8-10% revenue growth this year, driven by strong exports, recovery in semi-regulated markets, and steady domestic demand. Stable cash flows and low financial leverage will support solid credit profiles as companies pursue niche acquisitions, according to CRISIL Ratings.
India’s pharmaceutical sector is seeing robust growth, fueled by the Production Linked Incentive (PLI) scheme, digital adoption, and increasing demand for generic drugs. The pharmaceutical manufacturing market in the country is projected to reach US$ 35.38 billion by 2030, with an annual growth rate of 10.5%.
The COVID-19 pandemic, along with shifts in US trade policy, has further positioned India as a crucial player in global supply chains.
However as mentioned, India remains highly dependent on China for bulk drugs (APIs, key starting materials, chemicals, solvents, etc). China accounted for the largest share of India’s pharmaceutical imports in 2023-24 at 43.5%, according to Pharmexcil data. The US contributed 9.1%, followed by Germany with 5.1% share.
Nonetheless, experts feel that PLI schemes have set the foundation. The sector is projected to reach US$ 100 billion by 2025, with an expected growth rate of 10-12%. This growth is fueled by balanced demand across metropolitan, Tier I, and rural markets, each contributing around 30% to the total market share. With over 50% of its production exported last year, the sector highlights India’s significant role in the global pharmaceutical supply chain.
As per the report ‘Reimagining pharma and healthcare for India@100 – Bharat Ke Liye’, by EY and Organisation of Pharmaceutical Producers of India (OPPI), the Indian pharmaceutical industry aims to achieve targets of US$ 130 billion by 2030 and US$ 450 billion by 2047, aligning with the India@100 vision. This growth will be driven by a focus on innovation, deeper integration into the global pharmaceutical market, and enhanced access to integrated healthcare.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.