Global pharmaceutical giants are rewriting their innovation playbooks. Pharmaceutical companies must contend with drug development and R&D costs, which have soared to about $2.2 billion per developed drug asset.[1] Moreover, development and approval timelines for drugs and medicines can easily stretch over a decade.[2]
To address these high costs and inconsistent timelines, contract-based research and R&D outsourcing have become essential drivers behind the world's leading pharmaceutical breakthroughs. This trend is also supported by increasing complexity in biologics, precision medicine, and AI-driven drug discovery. To stay competitive, major pharmaceutical companies are outsourcing research-intensive, capital-heavy functions to specialised partners worldwide. Additionally, pharma R&D investments in India are continuously increasing.
India's emergence as a pharmaceutical centre is no surprise, but rather an outcome of affordable services, scientific depth, a GDP growing at 6.5%,[3] and most importantly, mature regulations and policies to drive drug development and research. Let us understand this further.
India - Becoming a global frontier for pharmaceuticals
As major pharmaceutical companies aim to streamline pipelines and expand access to innovation, the focus in global pharma outsourcing trends 2025 shifts notably towards India. The decision to outsource no longer depends only on cost but now focuses on strategic value. India's pharmaceutical R&D outsourcing has developed to provide precisely that.
India offers a rare combination of affordability and deep technical capability. Pharma innovation in India in 2025 reached new heights as the industry grew by 7.8% year-on-year.[4] Both demand, scale, and cost drive this advantage.
First, the cost advantage is undeniable. R&D expenses in India are significantly lower than in the US or Europe,[5] creating room for longer development cycles and broader research portfolios.
Second, the global shift towards contract development and manufacturing organisations and contract research organisations (CDMOs and CROs) benefits India's strengths. The country now hosts some of the most competitive players in the field, driving a rise in clinical trial outsourcing in India, particularly in oncology, metabolic disorders, and vaccines.
Third, India's workforce delivers both volume and precision. Companies can tap into a steady pipeline of scientific and clinical talent necessary for developing and testing new drugs.
Finally, the momentum is supported by capital. Private equity remains active in India's CRO/CDMO sector, while government pharma R&D incentives—through multiple notable schemes like the PRIP (Scheme for Promotion of Research and Innovation in Pharma Medical Tech under the Department of Pharmaceuticals, BioRIDE Scheme under Department of Biotechnology, and the Research, Development and Innovation Fund under Dept. of Science and Technology [6] and other R&D-linked tax benefits—further sweeten the equation for investors.
Pharmaceutical tailwinds propelled by robust Indian policymaking
India's pharmaceutical and biotech growth story has strong policy support behind it. A series of targeted government initiatives now act as growth catalysts for India's pharmaceutical R&D outsourcing and biopharma innovation.
- PLI schemes driving high-value R&D: The Production Linked Incentive (PLI) schemes, with an outlay exceeding ₹15,000 crore (~$2 billion) from 2020-2021 to 2028-29[7], are fueling pharma R&D investment in India by incentivising high-value manufacturing and novel drug development. These schemes prioritise complex generics, APIs, biosimilars, and emerging therapies, directly impacting the scale of contract research organisations in India. Moreover, there are specialised PLIs for Medical Devices and Instruments such as MRI machines and implants, with a budget of ₹3,420 crore.[8]
- Dedicated pharma and biotech clusters: Currently, the country has 118 pharma clusters spread over 19 states and UTs. Maharashtra leads the way with 40 clusters, while Gujarat and Karnataka follow with 13 and 8 clusters, respectively.[9] The government is fortifying the advanced pharma R&D hubs in India, including Hyderabad, Bengaluru, Ahmedabad, and Pune. These innovation clusters provide integrated ecosystems for research, trials, and manufacturing.
- Liberal FDI norms encouraging capital inflow: With 100% FDI allowed under the automatic route in greenfield pharma and up to 74% in brownfield,[10] India continues to attract strong foreign interest. In FY 2024-25, India's pharmaceutical sector attracted $891 million in equity FDI inflows, while medical and surgical appliances received a total of over $3,913 million in FDI from April 2000 to March 2025.[11] India's liberal FDI policy framework supports global capital inflow into CDMOs and CROs, boosting long-term pharma R&D investment in India.
- Regulatory alignment with global markets: India's regulatory agencies, including the Central Drugs Standard Control Organisation (CDSCO), are aligning closely with global standards. India has the highest number of US FDA-compliant facilities outside the US, a testament to the country's world-class and highly-regulated manufacturing ecosystem.[12] The country also supports faster approvals, enhancing India's global appeal for clinical trial outsourcing and late-stage development.
- Strong public funding and tax benefits: In addition to private equity, India offers powerful pharmaceutical innovation schemes, including tax benefits for new manufacturing units and funding through the Department of Biotechnology. These measures strengthen both startup-led and enterprise-level R&D capacity.
Global investors are betting on India's pharma R&D
Investing in India's pharma sector is an immensely rewarding opportunity in the global pharmaceutical outsourcing market. Investors seeking scale, stability, and speed often find the country's R&D ecosystem a satisfying blend of prospects and momentum.
Top-tier contract research organisations in India are achieving high EBITDA margins, supported by extensive talent pools, regulatory expertise, and global demand. With services spanning from early-stage discovery to commercial manufacturing, many of these firms play crucial roles in the global pharma value chain. International giants such as GSK and Pfizer have established R&D and manufacturing hubs in India to further bolster their global operations.
Currently, India's pharma sector is worth $55 billion in 2024, with a potential to grow by 2.2 to 2.4 times by 2030, to reach between $120 and $130 billion.[13] The nation's pharmaceutical exports are poised to grow 10- to 15-fold, reaching approximately $350 billion by 2047.[14] The projections reflect the sector's massive growth momentum - an opportunity not to be missed.
IPOs and cross-border acquisitions are on the rise, providing clear exit routes and liquidity. As pharma R&D investment in India continues to grow, global players are integrating Indian partners into long-term R&D cycles, especially in generics, biosimilars, and speciality drugs.
Conclusion
From early discovery to late-stage trials, India now plays a strategic role in driving efficiency and accelerating innovation for pharmaceutical giants worldwide. As global pharma outsourcing trends in 2025 lean further into scalable, tech-enabled partnerships, India stands out with both capacity and capability.
Backed by rising pharma R&D investment in India, supportive government schemes, and a growing network of FDA-compliant facilities, the country offers investors a rare mix of growth potential and operational resilience.
Although India is the world's leading supplier of generic medicines, supplying around 20% of the global demand for generics,[15] it still falls behind in terms of market value in the international pharmaceutical sector. The opportunity exists in this shift from a volume-based exporter to a value-focused leader in the pharmaceutical sector.
For those seeking exposure to the future of pharmaceutical innovation, the case for India is already clear. The smartest bets in global pharma are being placed here - and they're paying off. Learn more about investing in India's pharma sector by visiting investindia.gov.in
This blog is written by Anand Prasad
