Snapshot

Formulating success: The Indian pharmaceutical industry.

The Indian Pharmaceuticals industry plays a prominent role in the global pharmaceuticals industry.

Major segments of Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & manufacturing, biosimilars and biologics. India is a global leader in the supply of DPT, BCG, and Measles vaccines.

India is one of the biggest suppliers of low-cost vaccines in the world. India accounts for 60% of global vaccine production, contributing up to 70% of the WHO demand for Diphtheria, Tetanus and Pertussis (DPT) and Bacillus Calmette–Guérin (BCG) vaccines, and 90% of the WHO demand for the measles vaccine.

The nation is the largest provider of generic medicines globally, occupying a 20% share in global supply by volume, and is the leading vaccine manufacturer globally. India also has the highest number of US-FDA compliant Pharma plants outside of USA and is home to more than 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities as well as a highly skilled resource pool.

There are 500 API manufacturers contributing about 8% in the global API Industry. India is the largest supplier of generic medicines. It manufactures about 60,000 different generic brands across 60 therapeutic categories and accounts for 20% of the global supply of generics. Access to affordable HIV treatment from India is one of the greatest success stories in medicine. Because of the low price and high quality, Indian medicines are preferred worldwide, making it “pharmacy of the world”. 

100% Foreign Direct Investment (FDI) in the pharmaceutical sector is allowed under the automatic route for greenfield pharmaceuticals.

100% FDI in the pharmaceutical sector is allowed in brownfield pharmaceuticals; wherein 74% is allowed under the automatic route and thereafter through the government approval route.

For further details, please refer FDI Policy

  • %

    Total FDI inflows

  • $ Bn

    Export of Pharmaceuticals (FY 22-23)

  • $ Bn

    FDI (Apr 2000-Sept 2023)

India accounts for 60% of global vaccine production making it the largest vaccine producer in the world

India is one of the biggest suppliers of low-cost vaccines in the world and is the largest provider of generic medicines globally, occupying a 20% share in global supply by volume

Industry Scenario

The pharmaceutical industry in India is expected to reach $65 Bn by 2024 and to $130 Bn by 2030.

The pharmaceutical industry in India is currently valued at $50 Bn.

India is a major exporter of Pharmaceuticals, with over 200+ countries served by Indian pharma exports. India supplies over 50% of Africa’s requirement for generics, ~40% of generic demand in the US and ~25% of all medicine in the UK.

India also accounts for ~60% of global vaccine demand, and is a leading supplier of DPT, BCG and Measles vaccines. 70% of WHO’s vaccines (as per the essential Immunization schedule) are sourced from India. 

GROWTH DRIVERS

  • Government Support

    The support under PLI schemes is expected to promote the production of high-value products in the country and increase the value addition in exports as well as generate employment for both skilled and unskilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector. Three bulk drug parks, located in Gujarat, Himachal Pradesh, and Andhra Pradesh should provide a consistent supply of bulk drug active components and will ensure India's drug security.

  • Medical tourism

    Quality services at marginal costs compared to US, Europe, and South Asia

  • Infrastructure development

    India has the highest number of US-FDA compliant plants outside the US

  • Strong drug manufacturing

    Expertise in low cost generic patented drugs as well as end-to-end manufacturing

  • Strong domestic demand

    Launch of the largest National Health Protection Scheme globally

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Production Linked Incentive (PLI) Scheme

The Indian pharmaceuticals market is supported by the following Production Linked Incentive Schemes to boost domestic manufacturing capacity, including high-value products across the global supply chain.
1. PLI Scheme for Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) (PLI 1.0) - Under the PLI scheme for Bulk Drugs, the objective is to boost domestic production of 41 select critical bulk drugs in the country. 51 projects have been selected for the 34 notified bulk drugs. Out of this, 22 projects have been commissioned till 31st January 2023. An investment of INR 2019 crores have been reported while employing 1900 persons in the same period.
2. Production-Linked Incentive (PLI) Scheme for Pharmaceuticals d (PLI 2.0) - Under the PLI scheme for Pharmaceuticals, 55 applicants have been selected, including 20 Micro, Small & Medium Enterprises (MSMEs). As of 31st January 2023, sales of about INR 36,000 cr have been reported by the select applicants. The scheme has garnered an investment of INR 16,199 crores by these applicants in the first year of implementation while employing 23,000 persons in the same period.

  • Scheme Outlay INR 6,940 Cr

    PLI for Bulk Drugs

  • Scheme Outlay INR 15,000 Cr

    PLI Scheme for Pharmaceuticals Manufacturing

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    FAQs

    Frequently
    Asked Questions

    Is export incentive included in the calculation of GMR for the base year?

    No, as only the manufacturing revenue of the Applicant/ Group Companies is being considered in the definition of GMR given in clause 2.12 of the Operational Guidelines.

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    GMR - Consider a scenario, where the product manufacturing is completed at Factory A in the USA and such product is invoiced to Sales office in Singapore at ex-factory price and finally sold to a thirdparty customer from Singapore at sale price. For calculating GMR whether ex-factory price to be considered or the sale price to the end customer please clarify?

    Ex-factory prices, as certified by Statutory Auditor Certificate, will be considered in the instant case.

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    For calculating GMR - I goods are procured on a contract manufacturing basis, would the revenue from sales of such products would be counted towards GMR.

    In case the sales of products manufactured under contract manufacturing is booked as manufacturing revenue in the books of accounts and Statutory Auditor’s certificate is submitted by the applicant as per the Scheme, the same would be considered for calculating GMR.

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    This is regarding a query on the “Group Company” definition as per Pharma PLI Guidelines: The Applicant is a subsidiary of a Pharma Company incorporated in Singapore. There is a chain of about 20 companies in between the Ultimate Holding Company in USA and the Applicant. The query is whether all the entity's turnover will be required to be considered for the purpose of Global Manufacturing revenue (GMR). (i.e) Whether GMR includes revenue of Forward Chain (subsidiary companies) and Backward Chain (Holding Companies). Please note, that it may not be practically possible trace back the entire chain of entities.

    As per clause 2.3 of the operational guidelines, Group companies shall mean two or more enterprises which, directly or indirectly, are in a position to: Exercise 26% or more of voting rights in other enterprise; or appoint more than 50% of members of board of directors in the other enterprise. For the purpose of calculation of GMR, only those group companies as defined above, who have booked revenue from the manufacturing of pharmaceutical goods and/or in vitro diagnostic medical devices in their books, shall be allowed. The same shall be certified by a Statutory Auditor.

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    Whether sales of goods procured/ manufactured on a loan license/ contract manufacturing basis would be eligible for incentive under the Scheme. Whether trading revenue (P2P) & contract mfg. LLM (Loan License Manufacturing) to be included as part of global manufacturing revenue? P2P Revenue should be excluded while LLM revenue can be included.

    In case the sales of products manufactured under contract manufacturing/ LLM is booked as manufacturing revenue in the books of accounts and Statutory Auditor’s certificate is submitted by the applicant as per the Scheme, the same would be considered for calculating GMR. Trading revenue shall not be considered for GMR.

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