India's Pharmaceutical Industry

India is often called the "pharmacy of the world". It is the world's third-largest producer of medicines by volume. Most of what it makes are generic medicines: cheaper copies of drugs whose patents have expired, with the same active ingredient, strength and effect. Indian generics keep medicines affordable for patients in India, Africa, the US and many other countries.

What is a generic medicine?

When a company invents a new drug, it gets a patent. For about 20 years, no one else can make and sell that drug. The company sets a high price to recover its research costs. After the patent ends, other companies can make the same drug. These copies are generics. They must contain the same active ingredient and work the same way in the body. Because they skip the costly research, they are much cheaper, often 80% or more cheaper than the brand.

Why does it matter?

For a poor patient, the price of medicine can decide whether they get treated. India's generic industry brought down the cost of HIV medicines in the early 2000s, making treatment possible for millions in Africa. At home, generics lower household spending on health, which is a big cause of poverty in India.

Where did it come from?

At independence, foreign companies controlled India's drug market, and prices were among the highest in the world. The turning point was the Patents Act, 1970. It allowed patents only on the process of making a drug, not on the drug itself (the product). So Indian companies could legally make the same medicine using a different process.

This gave birth to a strong generic industry. When India joined the WTO, it had to follow the TRIPS Agreement on intellectual property. So the Patents (Amendment) Act, 2005 brought back product patents for medicines.

Section 3(d): India's guard against "evergreening"

The 2005 law added Section 3(d) to the Patents Act. It says a new form of a known substance cannot get a patent unless it shows better therapeutic efficacy (it works better as a treatment). This stops companies from making small changes to an old drug just to extend the patent, a practice called evergreening.

In Novartis AG v. Union of India (1 April 2013), the Supreme Court upheld this. It refused a patent for a new form of the cancer drug Glivec (imatinib mesylate), because it did not show better efficacy.

How big is the industry?

• India supplies about 20% of the world's generic medicines by volume and over 60% of global vaccine demand.
• In the US, Indian companies supply close to half of all generic prescriptions by volume.
• India's pharma exports were about US$ 31.11 billion in 2025-26, up from about US$ 30.38 billion in 2024-25.
• The US is the biggest market, taking about US$ 9.46 billion (about 30%) of these exports in 2025-26.

Who manages it in India?

• Department of Pharmaceuticals (Ministry of Chemicals and Fertilizers): policy and industry schemes.
• Central Drugs Standard Control Organisation (CDSCO), headed by the Drugs Controller General of India (DCGI): approves drugs and sets quality rules under the Drugs and Cosmetics Act, 1940.
• National Pharmaceutical Pricing Authority (NPPA): fixes ceiling prices of essential medicines under the Drugs (Prices Control) Order, 2013.
• Pradhan Mantri Bhartiya Janaushadhi Pariyojana: sells quality generics at low prices through Jan Aushadhi Kendras.

The weak spot: dependence on China for raw materials

Medicines are made from Active Pharmaceutical Ingredients (APIs), the part that actually treats the disease. APIs are made from Key Starting Materials (KSMs). India imports a large share of its APIs and KSMs from China. The COVID-19 supply shock showed how risky this is. To fix it, the government launched:

• PLI scheme for bulk drugs (2020): outlay of ₹6,940 crore to make critical KSMs, intermediates and APIs in India. It targets 41 KSMs needed for 53 APIs.
• PLI scheme for pharmaceuticals (February 2021): outlay of ₹15,000 crore for high-value products like complex generics, biopharmaceuticals and patented drugs.
• Bulk drug parks to give common facilities for API makers.

Commonly confused concepts

• Generic vs branded generic: A plain generic is sold by its chemical name. A branded generic is a generic sold under a company's brand name. Most generics sold in India are branded generics.
• Generic vs biosimilar: Generics copy simple chemical drugs and are exact copies. Biosimilars copy biological drugs (made from living cells, like insulin or antibodies). They are highly similar but not identical.
• API vs formulation: The API is the active ingredient. The formulation is the finished product, like a tablet, syrup or injection.
• Process patent vs product patent: A process patent protects only the method of making. A product patent protects the medicine itself, however it is made.

Issues, criticism and the way forward

• Quality concerns: Some Indian plants have received warnings from the US Food and Drug Administration (USFDA). Cough syrup deaths linked to Indian-made syrups in some countries damaged India's image. Stricter quality rules (revised Schedule M on good manufacturing practices) aim to fix this.
• Low research spending: Indian firms spend little on inventing new drugs compared with global firms, so India earns less from high-value patented medicines.
• API dependence: Heavy reliance on China for raw materials is a supply-chain risk.
• Trade risks: New tariffs abroad, like the US Section 232 action, show the risk of relying heavily on one market.
• Way forward: Experts suggest more research and development, moving into complex generics and biosimilars, stronger quality checks, and more API production at home.

Concepts to Know

• Patent: A legal right that lets only the inventor make and sell an invention for a fixed time, usually 20 years.
• TRIPS Agreement: The WTO agreement on Trade-Related Aspects of Intellectual Property Rights. It sets minimum rules for patents and copyrights that all WTO members must follow.
• Therapeutic efficacy: How well a medicine actually treats a disease.
• Orphan drug: A medicine for a rare disease that affects very few people, so companies have little profit reason to make it.
• Supply chain: The full chain of steps and suppliers needed to make and deliver a product.