India’s pharmaceutical industry is entering a transformative phase. In FY 2023-24, the sector was valued at around US$ 50 billion, ranking 3rd globally in terms of production volume, and exports made up more than half of that value. With ambitious projections to reach US$ 130 billion by 2030, India is not just fulfilling global demand for generics and vaccines, it is also shaping health diplomacy, self-reliance, and innovation. This article dives into what’s driving this growth, what challenges lie ahead, and how recent government policies are redefining India’s role as the “Pharmacy of the World”.

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India’s Pharma Sector – Detailed UPSC Notes

India: Pharmacy of the World

• India is globally recognized as the largest provider of generic medicines, fulfilling nearly 20% of global demand by volume.

• It is also the largest vaccine producer, supplying to UN agencies (UNICEF, WHO, PAHO) and countries across Africa, Latin America, and Asia.

• The term “Pharmacy of the World” is rooted in India’s ability to supply affordable, quality medicines at scale, crucial for global health security.

• Example: During the COVID-19 pandemic, India supplied COVAX vaccines to over 90 countries, reinforcing its health diplomacy.

Production & Exports

• Domestic market size: ~US$ 50 billion in 2023–24, projected to touch US$ 130 billion by 2030.

• Exports: Crossed US$ 30 billion in FY 2024–25, recording ~9% growth.

• Breakdown: Nearly 70% exports are finished formulations (tablets, syrups, injectables), while APIs and intermediates make up ~20%.

• India ranked 11th globally in value terms of pharma exports in 2023, but in terms of volume it is among the top.

• This indicates a value–volume mismatch: India supplies large quantities but at lower value, relying on generics.

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Meeting Global Generic Demand

• India is a trusted supplier of generics for both developed and developing countries.

• US and EU: Depend heavily on Indian generics to keep healthcare affordable.

• Africa and Latin America: Rely on India for essential drugs, vaccines, and affordable medicines for TB, HIV, and malaria.

• Despite this dominance, India lags in biosimilars, specialty generics, and patented drugs, where R&D investment and margins are higher.

• To remain competitive, India must move up the value chain from being just a generics hub to becoming an innovation-driven pharma leader.

National List of Essential Medicines (NLEM)

• NLEM is prepared by the Ministry of Health & Family Welfare and implemented by the National Pharmaceutical Pricing Authority (NPPA).

• Objective: Ensure that critical medicines remain affordable and available for all citizens.

• Latest revision (2022) expanded the list to 384 medicines, adding crucial drugs for cancer, diabetes, cardiovascular, and anti-infectives.

• Impact: Protects patients from excessive pricing, but reduces profit margins for companies, discouraging innovation.

• For UPSC, NLEM represents the balancing act between public health needs and industry growth.

Rising Import Dependence

• India imports ~70% of bulk drugs (APIs) and intermediates, largely from China.

• Critical APIs like paracetamol, antibiotics, vitamins, and anti-diabetic drugs have over 90% import dependence.

• Risks: Any supply disruption (like during COVID-19) or geopolitical tension can threaten India’s drug security.

• Government response: PLI Scheme for Bulk Drugs and 3 Bulk Drug Parks announced to revive domestic API production.

• Import substitution is not just an economic issue but also a national security priority.

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Good Manufacturing Practices (GMP)

• GMP is a quality assurance framework ensuring medicines are produced consistently and safely.

• Core principles: quality systems, validated processes, hygiene, contamination control, regular audits, record keeping, and accountability.

• In India, GMP is enforced by CDSCO and state drug regulators.

• Export markets (US, EU, WHO prequalification) demand strict GMP compliance.

• Recent crackdown (2024): Over 36% of Indian drug units inspected were shut for non-compliance, after deaths linked to contaminated syrups in Africa.

• Lesson: Without strict GMP, India’s global trust as Pharmacy of the World is at risk.

Key Laws & Regulators in India’s Pharma Sector

• The Drugs and Cosmetics Act, 1940

  • The primary law governing manufacture, import, distribution, and sale of medicines in India.

  • Ensures drug safety, quality, and efficacy.

  • Forms the legal backbone of India’s pharma regulation.

• Central Drugs Standard Control Organisation (CDSCO)

  • India’s national drug regulatory authority, under the Ministry of Health & Family Welfare.

  • Oversees approvals, licensing, quality checks, and pharmacovigilance across the country.

• Drugs Controller General of India (DCGI)

  • Head of CDSCO.

  • Responsible for approving new drugs, clinical trials, and vaccines.

  • Enforces safety standards and regulates large-scale drug manufacturing.

• US Food and Drug Administration (US FDA)

  • Regulates Indian medicines entering the US market.

  • FDA inspections of Indian plants are critical for export approvals.

  • Any FDA ban or warning letter can seriously impact India’s exports.

• Global Standards (EMA, WHO, etc.)

  • Indian pharma firms must comply with both Indian laws (CDSCO, DCGI) and international regulators (FDA in US, EMA in Europe, WHO-GMP for global supply).

  • Compliance ensures global trust and wider market access.

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Union Budget Allocations

• Budget 2021–22: ₹73,932 crore for health sector; focus on vaccine production and PLI schemes for domestic manufacturing.

• Budget 2024–25: ~₹90,958 crore for health sector; emphasis on innovation, bulk drug parks, and affordability.

• Trend: Rising allocations show government’s intent to make India a self-reliant and innovation-driven pharma hub.

Key Schemes Supporting Pharma

• PLI Scheme for Bulk Drugs (2020): ₹6,940 crore outlay for APIs and intermediates to cut import dependence.

• PLI Scheme for Pharmaceuticals (2021): ₹15,000 crore outlay to boost global competitiveness in formulations and innovation.

• Bulk Drug Parks Scheme: State-level pharma parks with common infrastructure (testing labs, effluent treatment, logistics hubs).

• Pharmaceutical Research & Innovation Programme (PRIP): ₹5,000 crore (2023–28) for R&D, patents, and innovation.

• Pradhan Mantri Bhartiya Jan Aushadhi Pariyojana (PMBJP): Expanding low-cost medicine outlets across India.

• These schemes aim to build self-reliance (Atmanirbhar Bharat) while promoting exports.

Jan Aushadhi Kendras – Social Impact

• Objective: Provide affordable generic medicines to citizens, especially low-income groups.

• Scale: ~16,912 Kendras as of June 2025, with a basket of 2,110 medicines and 315 surgical products.

• Reach: 10–12 lakh daily users benefit from Jan Aushadhi outlets.

• Savings: Citizens have saved ~₹38,000 crore over the last 11 years compared to branded drugs.

• Empowerment: Over 6,800 women entrepreneurs run Kendras, linking health access with livelihoods.

• For UPSC, PMBJP is an example of inclusive healthcare policy + women empowerment + affordability.

Major Challenges

• Quality control failures dent India’s credibility abroad.

• Heavy API dependence makes the industry vulnerable.

• NLEM price controls restrict profit margins and discourage R&D.

• Innovation gap: Too much reliance on generics, weak in new drug discovery.

• Global competition from China, US, ASEAN hubs.

• Skill shortage in biotechnology, biosimilars, and clinical research.

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Way Forward

• Build domestic API self-sufficiency through PLI and parks.

• Strengthen regulatory capacity of CDSCO and state drug controllers.

• Invest in R&D, AI, big data, and precision medicine.

• Enhance public–private partnerships for vaccine and drug development.

• Enforce strict GMP compliance to protect India’s export credibility.

• Expand Jan Aushadhi Kendras and integrate them with Ayushman Bharat.

• Diversify export markets to Africa, Latin America, and ASEAN.

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