India is one of the biggest supplier of generic drugs globally and is well known for its affordable vaccines and general medications. The Indian pharmaceutical market is valued at $50 billion, with exports valued at $26.5 billion and domestic consumption valued at $23.5 billion for the FY 2023-24.
The pharmaceutical industry of India supplies more than 50% of the global demand for several vaccines, 40% of general demand in the US and 25% of all medicine in the UK. The national pharmaceutical industry includes a network of 3,000 drug companies and 10,500 manufacturing units.
Government of India has taken major steps to decrease costs and to lower healthcare expenses. Some of the famous initiatives and schemes launched by the government are Umbrella Scheme, Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), Jan Aushadhi scheme, and more. Furthermore, the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) has also reached a remarkable milestone while achieving sales of Rs. 1,000 crore ($119 million) in October 2024.
In the Interim Budget of 2024-25, government of India outlay for the Jan Aushadhi scheme, it’s the initiative to offer affordable generic medicines in the nation, was increased to Rs. 284.5 crore ($34 million) for FY25, more from Rs. 110 crore ($13 million) in the revised estimation for FY24.
Why Pharmaceuticals?
Cost Efficiency
Indian medicines are preferred globally due to low price and high quality, making the country the ‘Pharmacy of the World’. India has been traditionally quite strong in the pharma industry, with a low manufacturing cost (30% to 35% lower than in the US and Europe), cost-efficient R&D (around 87% less than in developed markets), and cheap skilled labour.
Economic Drivers
Indian pharmaceutical corporations are expected to generate a revenue growth of around 9-11% in FY25. This growth is estimated to be fuel by strong performances in significant markets, while including the United States, Europe, and many emerging regions. India also has the largest number of USFDA-compliant pharmaceutical plants outside the US and more than 2,000 WHO-GMP approved amenities, while serving demand from more than 150 countries internationally with more than 10,500 manufacturing facilities.
Policy Support
The Production Linked Incentive (PLI) schemes for medicines is being applied with a total expense of the Rs. 15,000 crore ($2.04 billion) spanning from 2020-21 to 2028-29, to increase India's manufacturing capacity, raise investment, and diversify product offerings in the industry.
Increasing Investment
FDI has been allowed up to 100% through automatic route for Greenfield pharmaceuticals projects. Additionally, for Brownfield pharmaceuticals projects, FDI is allowed up to 74% through automatic route and beyond that over government approval.
