Indian pharma sector surpassed global average export growth
The Indian pharmaceutical sector is considered as the second biggest supplier of generic medicines in the world. Currently, the sector recorded a significant export growth rate of 9 percent. As per the report of McKinsey & Company, this remarkable growth rate of India’s pharma industry in exports is close to double the growth rate of global average. Though, the sector faces potential challenges due to changes happening in India and around the world.
Performance of the Indian pharmaceutical sector
India’s pharmaceutical sector has successfully achieved a growth rate of 9 percent. The sector is now able to meet 20 percent of the global demand. It has succeeded in meeting the demand of US generic drug and UK pharma market up to 40 percent and 25 percent, respectively.
The country has outpaced the USA in terms of number of Food and Drug Administration (FDA) approvals for manufacturing generic medicines. In the year 2024, the Indian pharma sector got about 752 sites approved by FDA and the World Health Organization for Good Manufacturing Practices (WHO GMP) certified around 2,050 sites. The country also got 286 sites approved by the European Directorate for the Quality of Medicines (EDQM).
In the last ten years, the number of times US FDA found “Official Action Indicated” or “OAI” has significantly contracted to 50 percent. Apart from this, the European Medicines Agency (EMA) also recorded a decline in non-compliance issues to 27 percent. It indicates that Indian pharmaceutical companies are successfully meeting the quality and safety standards of both European and the US markets.
Growth drivers of the remarkable performance
Indian pharma companies have a cost advantage of 30 to 35 percent against European and the US pharma manufacturers. The reason for this is robust improvement in operational efficiency, integration of digital technology, and lower costs of labour.
The pharma sector in India recorded a CAGR of 8 percent which is double the CAGR of global average. It boosted India’s capability to manufacture active pharmaceutical ingredients (APIs) and biotechnology.
Due to holding a cost advantage of 30 to 35 percent compared to Western countries in the world, India continues to be a popular choice for outsourcing. The country has recorded a robust CAGR of 13 to 14 percent in new and advanced treatments like cell and gene therapies, monoclonal antibodies, and mRNA. It has successfully outpaced the growth rate of traditional medicines.
Potential growth for the sector
The growth of Indian pharma driven by AI and generative AI-driven advancements can possibly lead to additional revenue growth of 60 billion to 110 billion dollars. It could lead to a boost in margins by about 4 to 7 percent and a 50 percent expansion in productivity of the sector.
In recent times, the major five Indian contract development and manufacturing organizations (CDMOs) have injected funding of 650 million dollars in order to strengthen their capabilities. It will boost India’s position in the international pharmaceutical supply chains.
Challenges faced by the sector
Despite the robust growth of India’s pharmaceutical industry, it faced certain challenges of consistently adopting smart automation and digital advancement. It also has to keep pace with the new emerging treatments which are going to transform the way medicines are manufactured and used.
Apart from this, it faced potential concerns like rising trend of nearshoring and geopolitical tension in the world. The world is facing expansion in demand for sustainable practices. India’s pharmaceutical industry has to find its path to continue its strong growth and development in the midst of these potential challenges in the world.
India’s pharmaceutical firms must focus on achieving cost-efficiency, error-free production, focus on sustainable practices and improvement in use of AI and digital tools.
In conclusion, the Indian pharmaceutical industry is strong due to robust development of the industry in the last 10 years. It has built a strong foundation for the industry. Though, the industry is going to face some challenges due to the changing trends in India as well as in the world. Pharma companies in India have to reevaluate their operational activities in order to achieve robust growth and maintain their position as global leaders in the market.
The image added is for representation purposes only
