Pharmacy Of The World, India Is Set To Change Strategy

Now, amid the current geoeconomic shifts expected to leave an imprint on investments and global trade, New Delhi is likely to carve out further incentive schemes, including tax breaks, to boost investments and woo foreign direct investments (FDI).

Pharmaceuticals will be a key focus sector.

The shift from generics to more sophisticated biologics is already being aided by policy tailwinds. The recently announced Biopharma Shakti Mission is set to strengthen the ecosystem for developing biologics and biosimilars. The programme with an outlay of Rs. 10,000 crore over five years is aimed at propelling the development and manufacturing of high-value drugs and other medicines. This will help the country in its journey from lower-end small molecules to the more evolved large molecules.

The recent spate of launches of GLP (Glucagon-like peptide) formulations after the original drugs used to treat type 2 diabetes and other obesity went off patent, is a good example of the evolution of the industry in India.

We don’t want to be seen as a low-cost manufacturing base for the world; we now need to look beyond and focus on a high-cost advanced product line.

– Nivruti Rai, MD & CEO, Invest India

“We are no longer just marketing India. We are proactively seeking investments aligned with India’s strategic priorities,” Nivruti Rai, MD &CEO, Invest India said, adding that the government has set a target of touching an FDI inflow of S$130 billion by 2030.

India has been the top supplier of generic drugs the world over, with a chunk of exports going to the US, Europe and Africa.  

The country's pharmaceutical market, estatimated at over US$ 55 billion, is expected to grow to aboout US$ 120-130 billion by 2030, according to a study by Bain & Co.

Government Push For Investments

The government has already allowed 100% FDI under the automatic route in several sectors. The recent trade agreements are further expected to boost investments. However, India, traditionally known for its low-cost manufacturing strategy, is now keen to move into manufacturing and exports of high-cost, value-added, sophisticated goods.

Until now, India’s manufacturing story has been primarily driven by affordability and scale. Several manufacturing units have been looking at shifting their factories from China to India. While foreign direct investment (FDI) inflow is welcomed, the thrust from now on will be to position India as a high-value advanced manufacturer moving away from the low-cost, low-margin production cycle.

The spate of trade agreements is also expected to boost investments. Under the recently signed free trade agreement between India and New Zealand, Wellington has committed to invest US$20 billion in India in the next 15 years.