The journey from generic to innovation
Dr. Priyanka Saurabh
India has today become one of the largest suppliers of affordable medicines globally. Its recognition as the “pharmacy of the world” is not just a metaphor, but a powerful testament to its production capacity, export expansion, and contribution to global public health.
By 2025-26, the Indian pharmaceutical market will surpass $50 billion and contribute more than 20 percent to the global generic drug supply. Even in developed countries like the United States, Indian companies supply approximately 40 percent of generic medicines, while India plays a crucial role in the availability of life-saving medicines in regions like Africa and South Asia.
This achievement is a result of changes in patent laws in the 1970s, when India adopted a process patent system, empowering domestic industry and paving the way for the production of affordable medicines.
But behind this dazzling achievement lies a profound contradiction. While India is a major exporter of finished medicines, it is also heavily dependent on imports for the raw materials and active pharmaceutical ingredients needed for their manufacture. It is estimated that India imports approximately 60 to 70 percent of its active pharmaceutical ingredients, with the major share coming from China. For critical ingredients like penicillin G, clavulanic acid, and paracetamol, this dependence exceeds 80 percent. This situation is a serious concern not only from an economic perspective, but also for national security and supply chain stability.
The COVID-19 pandemic starkly exposed the reality of this dependence. As soon as the lockdown in China disrupted supplies, pharmaceutical production in India was affected. Many pharmaceutical manufacturing units had to reduce production and some had to temporarily shut down. This made it clear that disruptions in the supply of raw materials could immediately impact India’s pharmaceutical production capacity. This experience made the need for self-reliance even more relevant.
In this context, the government announced an investment of approximately ₹16,000 crore through the Production Linked Incentive Scheme, which aims to promote domestic production of active pharmaceutical ingredients. Although some progress has been made, several structural problems remain. High production costs, technical limitations, and stringent environmental regulations have led to the closure of many manufacturing units, limiting domestic production capacity.
Weak regulatory frameworks also pose a major challenge in this sector. Drug regulatory agencies at the central and state levels clearly lack resources and trained manpower. Several Indian pharmaceutical manufacturing facilities have faced international criticism due to lapses in quality control.
In some cases, import restrictions have been imposed by foreign regulatory bodies due to manufacturing process flaws and violations of quality standards. This impacts India’s global reputation and adversely affects export prospects.
Additionally, the growing market for counterfeit drugs is emerging as a serious problem. This not only poses a threat to consumer health but also undermines the credibility of the pharmaceutical industry. Price control policies limit companies’ profitability, preventing them from investing adequately in research and development and limiting them primarily to generic production.
Lack of investment in research and development is a major weakness of the Indian pharmaceutical sector. While global pharmaceutical companies spend a significant portion of their revenue on research, this proportion in India is relatively low. As a result, India lags behind in emerging areas such as innovation-based medicine, biological drugs, and personalized medicine. These areas are expected to grow rapidly in the future, and if India does not increase investment in these areas in time, it could fall behind in global competition.
Lack of skills development also poses a significant obstacle. Advanced pharmaceutical manufacturing, biotechnology, and artificial intelligence-based research require trained human resources, which are currently insufficiently available. Lack of proper coordination between educational institutions and industry prevents students from gaining practical knowledge, which hinders the pace of innovation.
Environmental challenges are also affecting the sector. The pharmaceutical manufacturing process is energy-intensive and polluting, making it expensive to comply with environmental standards. This increases production costs and reduces competitiveness. Furthermore, limited use of digital technology creates obstacles in supply chain management and quality monitoring.
To address these challenges, a comprehensive, balanced, and long-term strategy is essential. First, domestic production of active pharmaceutical ingredients must be promoted. This should be done by expanding production-based incentive schemes and developing industrial clusters. Small and medium-sized enterprises must be encouraged and enabled to actively participate in this sector.
Second, the government must prioritize research and development by taking concrete steps to increase tax incentives and strengthen public-private partnerships. The use of modern technologies such as artificial intelligence and machine learning can make the drug discovery process faster and more effective.
Third, regulatory reforms are essential. Drug regulatory bodies must be provided with greater resources, technical capacity, and autonomy. Quality monitoring and transparency must be ensured through digital platforms.
Skill development also requires special attention. Developing a better synergy between educational institutions and industry will promote practical training to create a competent and innovative workforce.
Adopting green technologies is also essential for environmental sustainability. This will not only ensure environmental protection but also reduce production costs and increase competitiveness.
Ultimately, India must not limit its role to merely a supplier of affordable medicines, but must move towards establishing global leadership in innovation-based medicines, biological products, and personalized medicine. This requires a clear vision, strong policy support, and sustained investment. If India successfully addresses these challenges, it will not only strengthen its self-reliance but also emerge as a leading force in the global pharmaceutical landscape.
(The author is a PhD in Political Science. She also contributes to various publications)
