For decades, India has taken pride in its status as the world’s largest producer and exporter of generic drugs. It also has one of the world’s largest pharmaceutical industries in general.

Last year, the annual turnover of India’s pharmaceutical market was around $65 billion. According to some estimates, that figure will reach $130 billion by 2030. And by 2047 it could sky-rocket to $450 billion. Its vast manufacturing infrastructure has for long enjoyed the trust of some of the world’s toughest drugs regulators, including the US’s Food and Drug Administration (FDA).

Other factors have also worked in India’s favour in recent years. The West, especially the US, is trying hard to decrease reliance on China for drugs used in clinical trials and early-stage manufacturing. India, according to experts, is a natural alternative.

The US is India’s biggest foreign partner in the pharma sector. For context, 4 out of 10 prescriptions filled in the US in 2022 were provided by Indian companies. They also provided 47% of all generic drugs prescribed in the US that year.

The availability and provision of affordable life-saving Indian medicine to US citizens also saved the US healthcare system around $219 billion dollars the same year.

So, it’s clearly not just about pride. It’s also about profit. But maintaining those profits requires a healthy reputation, among other things. And that’s exactly what’s under threat right now, India’s longstanding status as “the world’s pharmacy.”

Regulators in India need to resolve a number of key challenges, both at home and abroad, to safeguard the country’s position as well as reputation in the global pharmaceutical industry.

Regulation

Regulatory failures at home, as well as criticism from regulators abroad, have hindered India’s ambitions to become a global pharmaceutical powerhouse.

Last August, the country’s Central Drugs Standard Control Organisation (CDSCO) accepted in a report that around 50 drugs produced in the country were “not of standard quality”. They included commonly used names such as Paracetamol, Amoxycillin and Vitamin B supplements.

A source at the regulatory body told Business Standard: “The drug regulator constantly monitors drugs and samples are randomly tested every month to ensure their quality as well as safety standards.” The source insisted that prompt action was taken against firms responsible for manufacturing below standard drugs. But the damage had been done, and the story had raised eyebrows and made headlines globally.

The central CDSCO and India’s other regional drug regulators have also failed to prevent the production of illegal counterfeit drugs, prompting critics to call the country’s overall drug regulatory system ‘a massive failure‘.

In the most unfortunate incident, a number of child deaths in The Gambia, Uzbekistan and India in recent years were linked to the use of a toxic cough syrups manufactured in India. Regulators eventually banned the medication in 2023.

Indian parliament

In March this year, an Indian parliamentary committee warned the same regulator to put its house in order and resolve ongoing issues and failures, after concerns that the world’s largest generic drugs producer was losing ground to other regional rivals.

The Parliamentary Standing Committee on Health and Family Welfare accused (CDSCO) of unnecessary delays, a lack of transparency and centralization of authority around issuing licenses to medical devices, prompting manufacturers to move to Vietnam and Malaysia instead.

“The smartest people I’ve ever worked with are in India, but the leadership skills – really poor.”

Rhonda Duffy, chief operations officer, Biocon Biologics

Criticism has also come from foreign regulators. For example, the FDA has sent warning letters to Indian-based manufacturing firms for “violations of Current Good Manufacturing Practice (CGMP) regulations for finished pharmaceuticals.”

Despite the US being India’s largest trading partner of generic drugs, the US drugs regulator has repeatedly criticized India’s manufacturing processes and standards and described them as falling short of US and other global requirements.

European regulators have also suspended hundreds of Indian-made drugs in the past due to unreliable tests conducted by Indian partners and manufacturers.

Production

China won’t just sit back and let India take over. Certain practices in recent years indicate a desire to undermine India’s capacity to produce high quality medicine for global markets. For example, Indian regulators have been criticized for failing to prevent China’s dumping of non-pharma grade ingredients, such as IPA (iso-propyl alcohol) into the Indian market.

This has undermined global trust in India’s pharmaceutical industrial standards. Countries such as the US are concerned about Indian drugs being diluted with low quality Chinese ingredients.

India’s pharmaceutical sector itself heavily relies on Chinese stocks of key starting materials (KSM), or the basic ingredients used in the production of generic medicine. According to studies, China provides around 40% of the global demand for KSMs. This over-reliance and lack of diversification has left both India and the US concerned.

And there are also questions around reliability. Experts believe the country has failed to convince international investors that they can trust her manufacturing capacity with high-value raw ingredients and get strong results.

According to Rhonda Duffy, chief operations officer at Biocon Biologics: “It’s about marketing ourselves as a country. We need to show that we can consistently meet high standards […] Big pharma companies are hesitant to risk high-value raw materials here, unless we can guarantee reliability.” 

Way forward

India has the ambition and the capacity to become a $10 trillion dollar economy by the year 2032. Its pharmaceutical industry is set to play a huge part in reaching that goal.

To do so, it has to overcome a number of challenges, mostly to do with production and regulation at home but also with safeguarding its reputation and status abroad.

For a start, it has to work for self-sufficiency in relation to KSMs and other key ingredients required for the production of generic drugs. Over-reliance on China doesn’t help India’s ambitions in the pharma sector. It undermines them.

Second, India needs to get serious with regulation. As experts have suggested, strong enforcement action should be a rule, not an exception, when it comes to dealing with regulatory violations.

This is vital because, as discussed above, failure in this area can cost lives around the world. It can also cost India its status as the largest source of affordable life-saving drugs for the rest of the world.

Third, India needs to find a way of ‘working with’ and not ‘working separate’ from European regulators. In the recent past, issues around the sharing of pharmaceutical and manufacturing data have caused tensions, both at business and political levels.

Such tensions don’t serve Indian interests, and New Delhi has to move away from the ‘my way or the highway’ approach when dealing with foreign governments and regulators.

Last, India has to sort out its leadership problem. The government should not only do more to support both the industry and the regulators, it should actually take the lead.

Again, in the words of Rhonda Duffy: “The smartest people I’ve ever worked with are in India, but the leadership skills – really poor. We need leaders who can inspire their teams, not just command them.”