The international pharmaceutical industry relies on a model of globalised production and value chains to achieve its main efficiencies and optimisations. Under this model, medicines and chemical compounds discovered in Western laboratories rely on either precursor chemicals supplied by, or synthesised in large batches by qualified personnel using the Intellectual Property (IP) holder’s recipe.
India has particularly fit this mold in recent years, and has quietly gained its position as the third largest pharmaceutical producer by volume in the world. Although its exports are still ranked 11 in terms of value, its healthcare sector boasts over 3,000 companies and 10,500 manufacturing facilities according to a report by India’s Press Information Bureau.
New Delhi has increased its focus on concluding a flurry of trade deals with its major trade partners in the Western world including the US, UK, EU as a whole bloc as well as with major countries in the EU such as France and Germany.
These trade deals take special care in addressing the sector, as India’s precursor inputs and manufacturing capability makes it highly competitive, especially for countries trying to diversify away from China. India is home to over 500 Active Pharmaceutical Ingredient (API) manufacturers, a number that accounts for around 8% of the global API industry.
However, learning from global policy practice India has stepped up the industrial subsidy programme, and a government-backed push into biologics. This series of stimuli has advantageously placed India’s pharmaceutical sector not only in competition with, but also in complementary form with its peers.
India’s ace in the hole, is primarily generic drug manufacturing, a sub-sector of pharmaceutical manufacturing in which it holds over 20% of the market by volume. This translates into manufacturing for over 60,000 brands in 60 distinct categories.
Domestically too India’s pharmaceutical manufacturing market is valued at around $60bn and could reach upwards of $130bn by 2030, which represents compounding growth that will more than double its reach in only five years.
Purportedly in FY2024-2025 India's pharmaceutical shipments across 191 countries reached $30.5bn which represents a 16-fold increase from FY2000-2021’s $1.9bn.
These exports are not only to jurisdictions where similar regulatory environments to India’s own operates, but over half of it is actually meant for Western markets where the EU and the US testing and additive guidelines are much stricter than India’s own. Reportedly India boasts the highest number of US Food and Drug Administration (FDA) authorised pharmaceutical manufacturing plants which are not on US soil.
However this feat is not because of the Indian government’s policy and fiscal stimulus moves alone. Private firms which are pharmaceutical and healthcare conglomerates in their own right include Sun Pharmaceutical Industries (NSE:SUNPHARMA), Cipla (NSE:CIPLA), Dr Reddy's Laboratories (NSE:DRREDDY), and Divi's Laboratories (NSE:DIVISLAB).
According to figures cited by the Government of India, total sector turnover reached approximately $55.5bn in FY2025-2026, while exports for the sector grew at a 7% compound annual rate over the decade to FY2025-2026, according to India's Economic Survey 2025-26.
One of the most price sensitive pharmaceutical manufacturing subsectors happens to be vaccines, which are highly subsidised internationally because of their outsized impact on all cause mortality across age groups, but especially among children.
Purportedly India supplies around 60% of UNICEF's total vaccine requirements, including 40%-70% of global demand for diphtheria, tetanus, and pertussis vaccines, as well as over 90% of the World Health Organisation's global measles vaccine requirements.
As most countries with a pharmaceutical and biochemical industry rushed to manufacture vaccines for the COVID19 pandemic, India too threw in its stock with multiple ventures, with Bharat Biotech’s Covaxin and the Serum Institute of India’s Covishield either beating or matching their global peers in their short development and roll out timeline.
However, the Indian pharmaceutical giants’s footprint is also felt in their global acquisitions - the most recent of which has been Sun Pharmaceutical Industries’s takeover of US based Checkpoint Therapeutics. Similarly Zydus Lifesciences (NSE:ZYDUSLIFE) took over France’s Amplitude Surgical, and Dr. Reddy’s Laboratories took over the portfolios of Eton Pharmaceuticals.
While India’s policy measures to attract even more foreign IP and associated manufacturing has been championed by the Production Linked Incentive (PLI) scheme in the pharmaceutical sector, it remains to be seen if the upward trajectory will continue to grow, especially as India’s API and precursor trade as well as finished product shipments rely on maritime transport routes, which are now - globally - under severe stress as the conflict in the Red Sea and the Strait of Hormuz region has made transit a risky undertaking.
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