India is one of the fastest-growing pharmaceutical markets in the world, and its market size has nearly doubled since 2005. The Indian pharmaceutical market is expected to reach US$ 20 billion by 2015, growing at a compound annual growth rate (CAGR) of 11.7 per cent during 2005–2015 and establish its presence among the world’s leading 10 markets. India is also the third-largest market in the world in terms of volume and fourteenth in terms of value.

India accounts for 8 per cent of global pharmaceutical production. Indian firms produce about 60,000 generic brands across 60 therapeutic categories. In addition, Indian firms manufacture approximately 500 different active pharmaceutical ingredients (APIs). Manufacturing costs in India are approximately 35 to 40 per cent of those in the US due to low installation and manufacturing costs.

Moreover, India is expected to be among the world’s top five innovative hubs with contributions of around 50 per cent to drugs discovered worldwide. India is a fast-growing custom manufacturing outsourcing (CMO) and custom research outsourcing (CRO) destination with a growth rate for CMO thrice the global market rate.

The potential of the rural pharmaceutical market in India has encouraged many MNCs to enhance their focus on this market. The untapped Indian rural market accounts for 45 per cent of the country’s total gross domestic product (GDP).

Exports of pharmaceutical products have more than doubled over three years to around US$ 5.2 billion in 2009–2010. In 2009, India had more than120 US FDA-approved plants in addition to 84 UK MHRA-approved plants. The GoI has also introduced zeroduty for technology upgrades in the pharmaceutical sector through the Export Promotion Capital Goods Scheme (EPCG) scheme. Foreign domestic investments (FDI) of upto 100 per cent in drugs and pharmaceuticals is permitted through the automatic route. For licensable drugs and pharmaceuticals manufactured by recombinant DNA technology and specific cell/tissue-targeted formulations, FDI requires prior government approval.