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Indian pharmaceuticals, a formula for success

India is the largest provider of generic medicines globally, occupying a 20% share in global supplies by volume. The country is home to 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities. The cost of production in India is around one-third of that in the US and almost half of that in Europe.

India is the source of 60,000 generic brands across 60 therapeutic categories and manufactures more than 500 different Active Pharmaceutical Ingredients (APIs). The export of generic drugs is one of India's core strengths. The export of pharma stood at USD 16.3 bn in 2015-16.

  •  Pharma exports recorded CAGR of 11.9% for decade ending 2015-16
  •  Third largest pharmaceuticals market by 2020 in terms of incremental growth


100% Foreign Direct Investment (FDI) is allowed under the automatic route for greenfield pharma

100% Foreign Direct Investment (FDI) is allowed in greenfield pharma and 74% FDI in brownfield pharma under automatic route, beyond 74% FDI is through government approval route

for more details refer FDI Policy 2017


  • Largest vaccine producer in the world
  • Bio-Pharma is the largest sector contributing to 62% of the total revenue.
  • Fourth largest medical device market in Asia

Industry Scenario

India is emerging as a key market for Medical Devices and Diagnostics

Indian pharmaceutical sector accounts for about 2.4% of the global pharmaceutical industry in value terms. The turnover of the sector was estimated at USD 27.5 bn in 2015-16. The market is expected to expand at a CAGR of 12.8% over 2015–20 to reach USD 55 bn.

Generic drugs with 70% market share form the largest segment of the Indian pharmaceutical sector. Over-the-counter (OTC) medicines constitute around 21% of the market while patented drugs have a 9% share.

The Indian medical device market which was valued at USD 3.9 bn in 2015, accounted for approximately 1.7% of the global medical device market. The industry estimate suggests that the Indian medical device market will grow at a CAGR of 16% to reach USD 8.1 bn in 2020. India is currently among the top 20 global medical device markets, and the 4th largest medical device market in Asia.

Growth Drivers

Pharma GD
  • Global share in exports in generics medicines


  • Overall contribution to Pharmaceutical exports


  • Generic drugs revenue share in Indian pharma industry


  • Patented drugs revenue share in Indian pharma industry


Key policies

Cluster development Scheme

The Department of Pharmaceuticals has announced the scheme for cluster development programme for pharma sector in July 2014 to enhance, quality, productivity and innovative capabilities of the SME pharma sector in the country.

Implementation of Scheme for Schedule M Compliance for SSI Pharma Units

As per the second supplement of the Revised Guidelines issued by MSME on the Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Up-gradation of Micro, Small and Medium Enterprises by the Ministry of MSME on 13th July, 2009 the pharma SSI units will now be able to avail the benefits of CLCS Scheme for financial assistance for an expanded list of products from 32 to 179.

Janaushadhi Scheme

With a view to achieve the objective of making available quality generic medicines at affordable prices to all, ‘Jan Aushadhi Scheme’ was launched by the Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers, Government of India in November, 2008 across the country.

National Pharmaceutical Pricing Policy 2012

NPPP 2012 that came into effect in December 2012 has the following salient features:

  • The regulation of prices of drugs is on the basis of essentiality of drugs as specified under National List of Essential Medicines (NLEM)-2011
  • The regulation of prices of drugs is on the basis of regulating the prices of formulations only
  • The regulation of prices of drugs is on the basis of fixing the ceiling price of formulations through Market Based Pricing (MBP).
Pharmaceutical Promotion Development Scheme (PPDS)

The objective of Pharmaceutical Promotion Development Scheme (PPDS) is promotion, development and export promotion in Pharmaceutical sector by extending financial support for conduct of seminars, conferences, exhibitions, mounting delegations to and from India for promotion of exports as well as investments, conducting studies/ consultancies, for facilitating growth, exports as well as critical issues affecting Pharma sector.

TB and Kala azar Scheme

Department of Pharmaceuticals is running two interdepartmental collaborative projects with National Institute of Pharmaceutical Education and Research (NIPER), Mohali for development of new drugs for Tuberculosis and Kala Azar. The two projects are as follows:

a) Target specific New Drug Discovery for Anti Tubercular Agents: The project aims at discovering high affinity ligands that can be developed into efficacious and less toxic drugs against TB.

b) Target specific New Drug Discovery against Kala Azar: The Kala Azar Project aims at discovering new drugs to fight against Kala Azar. The focus of the project is to put together a concerted effort to discover high affinity ligands that can be developed into efficacious and less toxic drugs against Kala Azar.

FDI Facts

  • FDI inflows (in USD) in drugs & pharmaceuticals during April 2000 - December 2017

  • FDI allowed in greenfield pharma

  • FDI allowed for brownfield pharmaceuticals projects

Recent Investments

  • November 2017 - Piramal Enterprises Ltd acquired a portfolio of spasticity and pain management drugs from UK-based specialty biopharmaceutical company Mallinckrodt Pharmaceuticals, in an all-cash deal for USD 171 mn.

  • October 2017 - Sun Pharmaceutical Industries Ltd, India's largest drugmaker, has entered into an agreement with Switzerland-based Novartis AG, to acquire the latter’s branded cancer drug Odomzo for around USD 175 mn.

  • January 2017 - Aurobindo Pharma has bought Portugal based Generis Farmaceutica SA, a generic drug company, for USD 144 mn.

  • November 2016 - Sun Pharmaceuticals Industries Limited plans to acquire 85.1% stake in Russian company Biosintez for USD 24 mn for increasing its presence in Russia through local manufacturing capability.

Major Investors