India's pharmaceutical sector will touch US$ 45 billion by 2020.

Indian Pharmaceutical Industry

Latest update: September, 2015

Steep growth expected in pharmaceutical expenditure

•Over 2012–20, total healthcare spending is expected to rise at a CAGR of 20 per cent to US$ 280 billion from US$ 65 billion 

•Industry revenues are expected to expand at a CAGR of 12.1 per cent during 2012-20 and reach US$ 45 billion 

•Pharmaceutical sales, as a percentage of total healthcare spending, are expected to increase to 27 per cent by 2016 from 18.9 per cent in 2008nbsp;


Trends in Indian Pharma sector revenue

•The Indian pharmaceuticals market increased at a CAGR of 12.79 per cent in 2015 from US$ 6 billion in 2005, and is expected to expand at a CAGR of 15.92 per cent to US$ 55 billion by 2020

•By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth and sixth largest market globally in absolute size

•India’s cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others.


Last Updated: September, 2015

SECTORAL REPORT | August, 2015


The Indian pharmaceuticals market is the third largest in terms of volume and thirteen largest in terms of value, as per a report by equity master. Branded generics dominate the pharmaceuticals market, constituting nearly 70 to 80 per cent of the market. India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume. Of late, consolidation has become an important characteristic of the Indian pharmaceutical market as the industry is highly fragmented.

India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level.

The UN-backed Medicines Patents Pool has signed six sub-licences with Aurobindo, Cipla, Desano, Emcure, Hetero Labs and Laurus Labs, allowing them to make generic anti-AIDS medicine Tenofovir Alafenamide (TAF) for 112 developing countries.

Market Size

According to India Ratings, a Fitch company, the Indian pharmaceutical industry is estimated to grow at 20 per cent compound annual growth rate (CAGR) over the next five years. Presently the market size of the pharmaceutical industry in India stands at US$ 20 billion. As on March 2014, Indian pharmaceutical manufacturing facilities registered with the US Food and Drug Administration (FDA) stood at 523, highest for any country outside the US.

India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Biopharma, comprising vaccines, therapeutics and diagnostics, is the largest sub-sector contributing nearly 62 per cent of the total revenues at Rs 12,600 crore (US$ 1.90 billion).


The Union Cabinet has given its nod for the amendment of the existing FDI policy in the pharmaceutical sector in order to allow FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to certain conditions.

The drugs and pharmaceuticals sector attracted cumulative foreign direct investment (FDI) inflows worth US$ 13.34 billion between April 2000 and June 2015, according to data released by the Department of Industrial Policy and Promotion (DIPP).

Some of the major investments in the Indian pharmaceutical sector are as follows:

  • Stelis Biopharma announced the breakthrough construction of its customised, multi-product, biopharmaceutical manufacturing facility at Bio-Xcell Biotechnology Park in Nusajaya, Johor, Malaysia's park and ecosystem for industrial and healthcare biotechnology at a total project investment amount of US$ 60 million.
  • Strides Arcolab entered into a licensing agreement with US-based Gilead Sciences Inc to manufacture and distribute the latter's cost-efficient Tenofovir Alafenamide (TAF) product to treat HIV patients in developing countries. The licence to manufacture Gilead's low-cost drug extends to 112 countries.
  • Founder and Executive Chairman, Apollo Hospitals, Mr Prathap C Reddy informed that the Apollo Hospitals Enterprise (AHEL) aims to add another 2,000 beds over the next two financial years, at a cost of around Rs 1,500 crore (US$ 226.26 million).
  • CDC, the UK’s development finance institution, invested US$ 48 million in Narayana Hrudayalaya hospitals, a multi-speciality healthcare provider, with an aim to expand affordable treatment in eastern, central and western India.
  • Cadila Healthcare Ltd announced the launch of a biosimilar for Adalimumab - for rheumatoid arthritis and other auto immune disorders. The drug will be marketed under the brand name Exemptia at one-fifth of the price for the branded version-Humira. Cadila’s biosimilar is the first in class and an exact replica of the original in terms of safety, purity and potency of the product, claims the company.
  • Torrent Pharmaceuticals entered into an exclusive licensing agreement with Reliance Life Sciences for marketing three biosimilars in India — Rituximab, Adalimumab and Cetuximab.
  • Piramal Enterprises Ltd acquired US-based Coldstream Laboratories for US$ 30.6 million in an all-cash transaction.
  • Indian Immunologicals Ltd plans to set up a new vaccine manufacturing facility in Pondicherry with an investment of Rs 300 crore (US$ 45.25 million).
  • SRF Ltd has acquired Global DuPont Dymel, the pharmaceutical propellant business of DuPont, for US$ 20 million.
  • Marksans Pharmaceuticals acquired US-based Time-Cap Laboratories, a manufacturer and marketer of solid dose generic pharmaceuticals, including private label over-the-counter medications, generic prescription drugs and nutritional supplements.
  • Intas Pharmaceuticals is the first global company to launch a biosimilar version of Lucentis, the world’s largest selling drug for treatment of degenerative eye condition called Razumab.

Government Initiatives

The Addendum 2015 of the Indian Pharmacopoeia (IP) 2014, published by the Indian Pharmacopoeia Commission (IPC) on behalf of the Ministry of Health & Family Welfare, is expected to play a significant role in enhancing the quality of medicines that would in turn promote public health and accelerate the growth and development of pharmaceutical sector.

The Government of India unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments. Further, the government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.

Romania is keen to tie up with the Indian pharmaceutical companies for research and develop new drugs. "Romania will collaborate with India for license acquisition to sale India's drugs in Europe," said Mr Mario Crute, Counsellor in Ministry of health in Romania at GCCI. The country will tie up with the Indian pharmaceutical companies for research and develop new drugs.

Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as follows:

  • Indian and global companies have expressed 175 investment intentions worth Rs 1,000 crore (US$ 150.84 million) in the pharmaceutical sector of Gujarat. The memorandums of understanding (MoUs) would be signed during the Vibrant Gujarat Summit.
  • Telangana has proposed to set up India's largest integrated pharmaceutical city spread over 11,000 acres near Hyderabad, complete with effluent treatment plants and a township for employees, in a bid to attract investment of Rs 30,000 crore (US$ 4.52 billion) in phases. Hyderabad, which is known as the bulk drug capital of India, accounts for nearly a fifth of India's exports of drugs, which stood at Rs 95,000 crore (US$ 14.3 billion) in 2014-15.
  • The government has planned to set up Rs 500 crore (US$ 75.4 million) venture capital fund to boost domestic pharmaceutical industry and to provide cheaper loans to entities looking to establish or upgrade manufacturing facilities.
  • At the launch of Cluster Development Programme of pharmaceutical sector, Mr Ananth Kumar, Minister of Fertiliser and Chemicals, announced that six pharmaceutical parks will be approved and established this year which will have sufficient infrastructure and facilities for testing and treatment of drugs and also for imparting training to industry professionals.

Road Ahead

The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others.

Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise.

The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

Exchange rate used INR 1= US$ 0.01508 as on September 9, 2015

References: Consolidated FDI Policy, Department of Industrial Policy & Promotion (DIPP), Press Information Bureau (PIB), Media Reports, Pharmaceuticals Export Promotion Council

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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