India has long been celebrated as the “pharmacy of the world,” supplying affordable generic medicines to nearly every corner of the globe. Yet beneath this reputation lies a complex story: while Indian firms have dominated the final stages of drug production, much of the critical raw material — Active Pharmaceutical Ingredients (APIs) and key intermediates — was still being imported, especially from China. This left India in a position more akin to a value chain middleman than a true manufacturing leader — a reality that is now rapidly transforming.
The Shift from Assembly to Authentic Manufacturing
For years, India’s pharmaceutical industry grew by taking advantage of cost efficiencies, skilled labor, and regulatory compliance to produce large volumes of generic drugs. Indian manufacturers supplied around 40% of the U.S. market’s generic drugs and satisfied significant global demand across emerging markets. However, roughly 70% of the basic building blocks for these drugs were imported, limiting India’s control over the full value chain.
Recognizing the risks of this dependency — starkly highlighted during pandemic-driven supply chain disruptions — policymakers and industry leaders initiated bold steps to change course. Today, the focus has shifted toward building domestic capacity for APIs and intermediates, moving higher up the value chain from simple formulation to end-to-end drug manufacturing and innovation.
Government Policy: The Catalyst for Change
One of the most significant drivers of this transformation has been the Production Linked Incentive (PLI) schemes aimed at boosting local manufacturing. These incentives have drawn unprecedented investment into bulk drug production, exceeding initial commitments and enabling domestic production of materials that were largely imported just a few years ago. Manufacturers are investing in greenfield projects and advanced infrastructure, while state governments offer additional support such as tax subsidies and land incentives.
Strategic industrial investments include the development of bulk drug parks that provide shared utilities, waste treatment, and logistics support — an approach designed to mirror successful manufacturing ecosystems seen in other parts of Asia. This ecosystem-wide enhancement reduces cost barriers and strengthens India’s ability to compete with entrenched suppliers abroad.
Global Demand and Strategic Opportunity
The world’s view of pharmaceutical supply chains has shifted. Countries and major corporations are now keen to diversify away from single-source dependencies. India — with its robust technical workforce, regulatory alignment with Western quality standards, and a rapidly modernizing industrial base — is ideally positioned to absorb this demand.
Its vast manufacturing network, which includes thousands of US FDA and WHO-GMP compliant facilities, enables India not only to produce generics at scale but also to aspire to become a trusted hub for complex drug components and biopharmaceutical innovations.
Challenges on the Path Ahead
Despite strong progress, the journey is not without hurdles. Infrastructure bottlenecks, environmental and land acquisition challenges, and delays in disbursing subsidies can slow momentum. Moreover, competition from established global players and production technologies still poses cost and scale challenges in certain segments of API production.
Nevertheless, the structural changes taking place — from policy incentives to infrastructure upgrades — are laying the foundation for a more resilient, self-reliant pharmaceutical ecosystem.
A New Chapter in Global Pharma Leadership
If current trends continue, India’s pharmaceutical sector is poised to capture a far greater share of the global market, with projections suggesting significant expansion in both volume and value. What was once a supplier of low-cost generics is rapidly evolving into a global manufacturing powerhouse with innovation capabilities and strategic global influence.
This evolution marks more than just economic growth — it underpins global health security, ensuring diversified, reliable supply chains for essential medicines and potentially reducing risks associated with geopolitical tensions and supply disruptions. It’s not just India’s pharmaceutical industry that stands to benefit; the world may soon have access to more secure, high-quality, and affordable medicines manufactured from the first molecular building blocks to the finished product.
