The India story: The journey to becoming the 'pharmacy of the world'

Critical tweaks in laws, spirit of enterprise and the pandemic brought about this transition. Tech and innovation will now define the industry's future

To get a sense of where India’s pharmaceutical industry was 25 years ago and how far it has come, we need to turn the clock back to the 1970s, when Indira Gandhi, the prime minister then, is said to have received a message from the scientist Yusuf Hamied, who is now the non-executive chairman of Cipla. Hamid asked her: Should Indians be denied a lifesaving drug (propranolol, a cardiac drug) because the inventor “does not like the colour of our skin”? 

 

What followed is today part of India’s corporate folklore: The country’s patent laws were changed almost overnight. This shift allowed pioneers of the Indian pharma industry, like Hamied, to make slight modifications in manufacturing processes and produce generic versions of patented drugs. The new law stipulated that companies could only patent the process to make a product, not the product itself, and that protection lasted for just seven years.

 

Several years later, India became a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which came into effect on January 1, 1995. The agreement binds all members of the World Trade Organisation. India subsequently amended its patent laws to comply with TRIPS, which introduced product patents for pharmaceuticals. This granted inventors exclusive rights to their inventions for 20 years, regardless of the manufacturing process. However, in the last 25 years, post-TRIPS, Indian pharma companies have significantly increased investments in R&D, becoming integral players in the global pharmaceutical value chain.

 

India’s Patents Act has been instrumental in shaping the country’s pharma landscape. It encouraged reverse engineering, allowing Indian companies to produce the same drugs through different processes. Amendments over the years, such as the 2005 changes, motivated companies to innovate. More recently, though, the Draft Patents (Amendment) Rules, 2023, have raised concerns among experts, fearing they may hinder the timely availability of affordable, high-quality generic drugs.

 

From being a net importer of pharmaceutical products in the late 1980s, India has transformed into a major supplier of generics worldwide. By 1995, India’s pharma exports had reached $504 million. Fast forward to 2023–2024, exports hit $27.9 billion and are projected to touch $31 billion in 2024–25.

 

In the last two decades, India’s pharmaceutical industry — domestic and export combined — has expanded nearly 20-fold, from $3 billion in 1999 to $58-59 billion in 2024.

 

Our focus was on process development during the earlier patent era, explains a former CEO of a major Indian pharma company who does not wish to be named. “Until the 2000s, 60-65 per cent of our R&D spend was on process engineering and reverse engineering, with only 5 per cent directed toward novel molecules. This changed after 2005, with 30-35 per cent of R&D now going towards innovative research.”

 

Zydus Lifesciences Chairman Pankaj Patel, whose company developed the novel chemical entity Lipaglyn (Saroglitazar) for diabetic dyslipidemia by controlling blood sugar and cholesterol levels in 2013, after 12 years of research, reflects on India’s evolution: "Over the decades, India has emerged as the pharmacy of the world”, supplying 20 per cent of global medicines by volume and 60 per cent of the global vaccine demand. “India is the largest supplier of low-cost generics, vaccines and affordable medicines,” says Patel, who envisions the sector will surpass $130 billion by 2030 and reach $400 billion by 2047. He is confident that the next two decades will see more innovation, resulting in new patented medicines from India.

 

Dr Reddy’s Laboratories Chairman Satish Reddy echoes Patel’s optimism. India now supplies 40 per cent of the US's generic drugs and 25 per cent of the UK’s medicines, he says. Globally, he adds, India ranks third in pharmaceutical production by volume and 14th by value. Reddy asserts, “To grow from its current $50-odd billion value to $130 billion by 2030, innovation will be the key. Our industry has the potential to grow, not just in size and reach but also in capability, complexity and innovation.”

 

The pandemic push

 

“It was a dramatic night,” recounts Balram Bhargava, former director general of the Indian Council of Medical Research (ICMR), in his memoir Going Viral. It was the night when scientists here discovered that the SARS-CoV-2 virus had reached Indian shores.

 

India was at the forefront of the global vaccine response, achieving several firsts: the first indigenously developed DNA vaccine, ZyCoV-D (Zydus Lifesciences); India’s first protein sub-unit vaccine, Corbevax (Biological E); its first mRNA vaccine, Gemcovac Gemcovac (Gennova Biopharma); and the world’s first intranasal Covid-19 vaccine, iNCOVACC (Bharat Biotech). Serum Institute of India’s (SII’s) Covishield and Bharat Biotech’s Covaxin were key contributors among the 2.2 billion Covid-19 shots administered in India.

 

Rajesh Jain, CMD of Panacea Biotec, recalls the rapid response during the pandemic. "It was a unique event that showed how the system could quickly reinvent itself, from hospital beds to vaccines and drug repurposing,” he says, while noting that the pace of work has since returned to pre-pandemic levels. “Those were extraordinary times, with all research efforts directed towards one goal. Now, companies are focusing on diverse projects.” Panacea, for instance, is collaborating with the ICMR on a dengue vaccine.

 

One lasting change, however, is how we now approach “Disease X” (unknown future threats). “The world is preparing for unpredictable, novel threats requiring rapid global responses. The WHO has published a checklist to help national authorities get ready for the next pandemic,” Jain explains.

 

India’s Covid-19 vaccine coverage stands as a success story, with 95 per cent of the eligible population aged 12 and above having received at least one dose and 88 per cent fully vaccinated with both doses.

 

As the world’s largest vaccine manufacturer by volume, SII is now part of the Coalition for Epidemic Preparedness Innovations (CEPI) network in the Global South, supporting rapid, agile, and equitable responses to future disease outbreaks. The mission is to develop new vaccines against known or novel infectious diseases within 100 days of a pandemic threat being identified.

 

The future of the vaccine industry lies in having several candidates and platforms ready at Phase 2 clinical trials, so they can be quickly advanced, says Jain. He stresses that industry support from governments is essential to ensure there is a market for these candidates.

 

The next 25 years: AI, biologics 

 

Pharma leaders believe that biologics will play a crucial role in addressing today’s and tomorrow’s diseases. 

 

“There are nearly 11,000 rare and orphan diseases without cures, as well as neglected tropical diseases that need healthcare solutions,” Patel says. He adds that a future-ready pharma sector will see technology as a gamechanger – artificial intelligence (AI), internet of things (IoT) and big data analytics will bring significant improvements in manufacturing, quality, and research.

 

In March, Reddy’s team organised a roundtable with experts from government research institutes, academia, and industry on ‘Emerging Frameworks in Innovation,’ which resulted in a whitepaper. The innovation agenda, they agreed, must factor in the cost of technology, the need for new capabilities, long gestation periods, and a high cost of failure.

 

Further, precision medicine and personalised treatments like CAR-T cell therapy are set to lead the way.

 

Healthcare start-up Doceree’s founder, MD and Global CEO, Harshit Jain, adds that the shift from broad approaches to personalised, data-driven strategies has already begun transforming how key stakeholders connect. “Challenges I once assumed unsolvable as a doctor are now being addressed,” he says. Initially met with scepticism, tools like electronic health records have replaced paper files, telemedicine has brought care to patients' homes, and AI is supporting diagnostics.

 

In 2001, Isro enabled telephonic medical consultations between a rural hospital in Aragonda, Andhra Pradesh, and Apollo Hospital in Chennai. Since then, telemedicine in India has grown, peaking during the pandemic. In 2023, the telemedicine market in India was valued at $2.5 billion. By 2032, it is expected to reach $16.9 billion, with a compound annual growth rate (CAGR) of 23.88 per cent.

 

Hospitals are increasingly using digital platforms to source patients and provide more personalised services through data-driven insights. Demand for Indian healthcare services is also growing internationally.

 

Ashutosh Raghuvanshi, MD & CEO of Fortis Healthcare, says, "Over the past two decades, India has established itself as a global hub for medical tourism, offering high-quality healthcare at competitive costs." Valued at approximately Rs 1 trillion in 2024, the sector is projected to grow at a CAGR of 17.2 per cent, surpassing Rs 4.3 trillion by 2034.

 

In the early 2000s, India's medical tourism mainly attracted patients from neighbouring countries for complex surgeries like cardiac and orthopaedic procedures. "Today, around 7.3 million medical tourists visit India annually from regions including West Asia, Africa, the commonwealth countries, SAARC, Southeast Asia, and the Pacific Rim," Raghuvanshi points out. He expects medical tourism’s contribution to revenues to rise to 12-13 per cent, up from the current 9 per cent.

 

Digitisation will also help cover a larger population and will be a major theme in the coming decades.

 

Rajan Kohli, CEO of CitiusTech, a tech service provider to healthcare companies, believes that as the Indian population moves further into the middle class and economic growth continues, healthcare spending will rise, with demands for better care across the board. “Standardisation of technology and digitisation of records will be a significant movement. India is uniquely positioned to centralise healthcare records using the JAMstack, which no other country has,” he says. “If we can do something similar for health records, it would be a gamechanger for our citizens.” He adds that the Ayushman Bharat Digital Mission could be a catalyst for this transformation.

 

India’s healthcare sector, which now attracts $5-6 billion in annual investment (compared to $3-4 billion pre-Covid), is projected to reach $285 billion by 2028, implying growth at twice the pace of GDP. By 2030, 140 million additional households will be classified as middle-class, driving a 3-4x increase in healthcare spending, according to Visalakshi Chandramouli, managing partner at Tata Capital Healthcare Fund II.

 

Improved insurance penetration will also play a key role. “India’s health insurance coverage has increased from around 25 per cent  in 2013 to 65 per cent in 2023, but 35 per cent of the population (around 500 million people) remain uninsured,” she says.

 

The burden of diseases such as diabetes, cardiovascular conditions, and cancer is projected to rise from 169 million today to 226 million by 2030. India will also need an estimated 2.4 million additional hospital beds to meet the WHO’s recommended ratio of three beds per 1,000 people.

 

“With these macro trends and the sector’s strong track record of delivering superior returns, we expect it to continue attracting around $5-6 billion in private capital annually,” Chandramouli concludes. 

In the pink of health

 

> India’s share of pharmaceuticals & drugs in global market: 5.71% 

> Formulations & biologics dominate exports, at 72.54%, followed by drug intermediates & bulk drugs 

> In FY25 (until June 2024), exports of drugs & pharmaceuticals stood at $7.20 billion

> India has highest number of US Food and Drug Administration-compliant companies with plants outside of America

> About 8 out of 20 global generic companies are from India

> Over 55% of exports from India are to the highly regulated markets

> WHO sources 65-70% of the vaccine it needs from India