India should look beyond generics if it wants bigger share of global pharma pie, says NITI Aayog

NITI Aayog's Trade Watch Quarterly report (June 2026) highlighted that India, despite being the world's third largest pharmaceutical producer by volume, capt...

What Happened

NITI Aayog's Trade Watch Quarterly report (June 2026) highlighted that India, despite being the world's third largest pharmaceutical producer by volume, captures only 2.8% of the $1.3 trillion global pharmaceutical market.
India dominates global generics — holding approximately 4% of the $571.5 billion global retail medicines market — but its presence in biologics, vaccines, and advanced therapies (the fastest-growing segments) is minimal.
India's exports in blood products, vaccines, and immunologicals totalled only $2.2 billion, representing just 0.6% of global demand in this high-value $390 billion segment.
Indian pharmaceutical companies invest roughly 7% of net sales in R&D, against 15–20% by global innovators, constraining the transition to higher-value product categories.
India's supply chain remains critically dependent on China for 66–86% of Active Pharmaceutical Ingredient (API) inputs across several key categories, creating both economic and strategic vulnerabilities.

Static Topic Bridges

Generic Medicines, Biologics, and Biosimilars: Definitions and Regulatory Distinctions

Generic medicines are chemically synthesised small-molecule drugs that are bio-equivalent to branded originator drugs whose patents have expired. Biologics are medicines derived from living organisms (cells, bacteria, yeast) — they include vaccines, monoclonal antibodies, hormones (like insulin), and immunotherapies. Biosimilars are near-copies of approved biologics, but because biologics are structurally complex and produced in living systems, they cannot be identically replicated as chemical generics can; regulators require clinical evidence of similarity.

Global biologics market is the fastest-growing pharmaceutical segment, expected to exceed $500 billion by 2030.
India's biosimilar regulatory framework is governed by the Biologicals Guidelines issued by the Central Drugs Standard Control Organisation (CDSCO) under the Drugs and Cosmetics Act, 1940.
India has approved several biosimilars (trastuzumab, bevacizumab, rituximab) at a fraction of originator costs, establishing early credentials.
Manufacturing biologics requires specialised bioreactor infrastructure, cell-line development, and cold-chain logistics — areas where India's investments remain limited.
The high entry cost and IP complexity of biologics production is the primary barrier separating India's generics strength from the biologics market.

Connection to this news: NITI Aayog's diagnosis that India captures 0.6% of the global biologics/vaccines market despite manufacturing competence in generics directly points to this infrastructure and R&D gap. Closing it requires policy intervention in both financing and regulatory capacity.

Active Pharmaceutical Ingredients (APIs) and India's China Dependency

Active Pharmaceutical Ingredients (APIs) are the biologically active components in a drug product. India is a major formulations exporter but is heavily dependent on imported APIs, particularly from China, which supplies 66–86% of critical API categories including antibiotics (penicillin, cephalosporins), vitamins, and fermentation-based products.

India imports over 70% of its bulk drug (API) requirements from China.
During COVID-19, supply chain disruptions from China caused shortages of paracetamol, antibiotics, and other essential medicines, exposing this vulnerability.
The government launched the Production Linked Incentive (PLI) Scheme for Bulk Drugs in 2020 with an outlay of ₹6,940 crore over 6 years to incentivise domestic API manufacturing.
Three Bulk Drug Parks have been approved (Andhra Pradesh, Gujarat, Himachal Pradesh) with combined central support of ₹3,000 crore for shared infrastructure.
By 2025, PLI investments had reached ₹4,709 crore against a committed ₹3,938.5 crore; domestic capacity created for 26 APIs, KSMs, and intermediates.

Connection to this news: NITI Aayog's report frames China dependency as both an economic and a strategic security concern. Reducing API imports and moving up the value chain to biologics/advanced therapies are complementary objectives — both require the kind of R&D and infrastructure investment that government schemes like PLI, Bulk Drug Parks, and the National Biopharma Mission are designed to catalyse.

Production Linked Incentive (PLI) Scheme: Design and Scope in Pharmaceuticals

The PLI scheme is a demand-side manufacturing incentive introduced in 2020 across 13 sectors. In pharmaceuticals, there are two distinct PLI schemes: one for bulk drugs/APIs (incentivising domestic API manufacturing to reduce import dependency) and one for complex/high-value pharmaceuticals (incentivising production of biologics, patented drugs, cell-gene therapy products, and complex generics). Both operate on a sales-threshold basis — incentives are paid as a percentage of incremental sales over a base year.

PLI for Bulk Drugs: Total outlay ₹6,940 crore; targets 41 critical APIs/KSMs across four categories.
PLI for Pharmaceuticals (Complex/High-Value): Outlay ₹15,000 crore; targets innovative molecules, biologics, biosimilars, and patented drugs produced under voluntary licensing.
PLI has been credited with attracting private investment and reducing some import dependencies, but critics argue the scheme alone cannot substitute for sustained R&D investment and world-class research infrastructure.
India's pharma exports grew from $24 billion (2019-20) to $35.8 billion (2025), but predominantly in generics.

Connection to this news: The NITI Aayog report implicitly evaluates the adequacy of PLI in shifting India toward high-value segments. Its recommendation for stronger PLI push and FTA pharma chapters together signals that supply-side incentives (PLI) need trade-side architecture (FTA chapters) to ensure market access once India does scale up in biologics.

India's Pharmaceutical Sector: Strategic Importance and Regulatory Bodies

India is often called the "Pharmacy of the World" — supplying 20% of global generic medicine exports by volume, and manufacturing ~60% of the world's vaccines. The sector is regulated by the Central Drugs Standard Control Organisation (CDSCO) under the Ministry of Health, and the Department of Pharmaceuticals under the Ministry of Chemicals oversees industrial policy. India has 3,000+ pharmaceutical companies, and the sector employs approximately 27 lakh people.

CDSCO is India's national regulatory authority; it aligns with WHO's Good Manufacturing Practices (GMP) framework.
India supplies ARV (anti-retroviral) drugs to over 67% of HIV patients globally through the PEPFAR programme.
The Drugs (Prices Control) Order (DPCO), 2013, issued under the Essential Commodities Act, empowers the National Pharmaceutical Pricing Authority (NPPA) to regulate prices of essential medicines.
India's vaccines: Serum Institute of India (Pune) is the world's largest vaccine manufacturer by volume; Bharat Biotech (Hyderabad) developed Covaxin during COVID-19.

Connection to this news: India's "Pharmacy of the World" identity is built on generics and vaccines volume. NITI Aayog's push to enter biologics, biosimilars, and advanced therapies is about redefining this identity from volume-leader to value-leader — a shift that would dramatically improve India's 2.8% global market share.

Key Facts & Data

India: 3rd largest pharmaceutical producer globally by volume.
India's global pharma market share: 2.8% of $1.3 trillion global market.
India's generic medicines market share: ~4% of $571.5 billion global retail medicines market.
India's biologics/vaccines/immunologicals exports: $2.2 billion — just 0.6% of $390 billion global segment.
India R&D spend in pharma: ~7% of net sales (global innovators: 15–20%).
China supplies 66–86% of India's critical API categories.
PLI for Bulk Drugs: outlay ₹6,940 crore; domestic capacity for 26 APIs created by 2025.
Serum Institute of India is the world's largest vaccine manufacturer by volume.
India supplies approximately 20% of global generic medicine exports by volume.
India's pharmaceutical sector employs approximately 27 lakh workers and contributes ~1.7% to GDP.