India is expected to be the third-largest global generic active pharmaceutical ingredient (API) merchant market by 2016, with a 7.2 per cent market share. In 2012, drug companies from India filed 49 per cent of the overall drug master filings (DMFs) in the US.
The Indian pharmaceutical sector accounts for about 1.4 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms. The country's pharmaceutical industry is expected to expand at a compound annual growth rate (CAGR) of 14.5 per cent over 2009-2020 to reach US$ 55 billion. With 72 per cent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector. The generics market in India is expected to grow to US$ 26.1 billion by 2016 from US$ 11.3 billion in 2011.
The Government of India plans to set up a US$ 640 million venture capital fund to boost drug discovery and strengthen pharma infrastructure. Government expenditure on health has increased from US$ 14 billion in 2008 to US$ 23 billion in 2011.
Due to a genetically diverse population and availability of skilled doctors, India has the potential to attract huge investments to its clinical trial market. Demand for generic medicines in rural markets has seen a sharp growth. Various companies are investing in the distribution network in rural areas. Growing demand could open up the market for production of high-end drugs in India.