The Indian pharmaceutical sector has set its sights on a future marked by innovation and value creation to seize a larger share of the global market and ramp up exports. Through a notification dated 16th August, 2023, the Ministry of Chemicals and Fertilisers has introduced the Scheme for Promotion of Research and Innovation in Pharma MedTech Sector.
As per a report dated 21st October, 2020 on Global Pharmaceutical Market opportunities and strategies, innovation accounts for two-thirds of the opportunities in the global pharmaceutical industry.
Current Market Position:
Currently, the Indian pharmaceutical industry holds a 3.4% market share of the global pharma industry. However, projections indicate that if the industry continues with its business-as-usual approach, its market value will grow to approximately $108 billion USD by 2030, with an 11% Compound Annual Growth Rate (CAGR). In contrast, the global pharma market, valued at $1230 billion USD in 2020, is expected to reach $3206 billion USD by 2030, with an 8.5% CAGR. To truly capitalize on this opportunity, India aims to achieve a 4% market share, reaching a market size of $130 billion USD. Pushing further to a 5% market share would position India at a market size of $160 billion USD.
R&D Investment and Innovation:
The key to this ambitious growth lies in increased research and development (R&D) investment. Currently, India’s R&D spending in the pharmaceutical sector lags behind countries like the United States and China. In 2021, the top ten Indian pharmaceutical companies allocated approximately 7.2% of their sales to R&D. To leapfrog into new areas, India must significantly enhance its R&D expenditure and prioritize research and innovation. Six priority areas have been identified to shape the future trajectory of the pharmaceutical industry.
Diversification of Exports:
India’s pharmaceutical exports currently heavily rely on low-value generic drugs, while high-value patented drugs are largely imported. This gap underscores the need for significant investment in high-value production and world-class pharma R&D. To incentivize investment in these categories, targeted interventions are required, focusing on areas like bio-pharmaceuticals, complex generic drugs, patented drugs, and emerging therapies such as cell-based or gene therapy drugs.
Medical Devices Sector:
In addition to pharmaceuticals, India’s medical device sector offers promising growth opportunities. The sector, valued at approximately $11 billion USD (around ₹ 90,000 crore) in 2020, holds a 1.5% share in the global medical device market. With a compound annual growth rate (CAGR) of 10-12% over the last decade, this sector is driven by factors like a growing and aging population, increased income levels, infrastructure development, and heightened healthcare awareness. The COVID-19 pandemic has further highlighted the sector’s significance, with Indian companies contributing to the production of critical medical devices and diagnostic kits.
R&D for Animal Health:
Recognizing that 70% of human pathogens in recent decades have originated from animals, India is also focusing on animal health. This sector has immense potential, with the Indian Animal Health market reaching INR 73.4 billion in 2022 and projected to hit INR 120.3 billion by 2028. Investment in pharmaceutical R&D will also benefit the animal health care market, aligning with the “ONE HEALTH” vision.
The primary objective of this initiative is to transition the Indian Pharma MedTech sector from a cost-based to an innovation-based growth model. This transformation aims to strengthen research infrastructure, foster industry-academia collaborations in priority areas, cultivate a culture of quality research, and nurture a pool of talented scientists. Ultimately, it aims to ensure sustained global competitiveness and create high-quality employment opportunities in India.
Salient Features of the Scheme:
The scheme comprises two key components:
Component A: Strengthening research infrastructure through the establishment of Centers of Excellence at National Institute of Pharmaceutical Education & Research (NIPERs) and
Component B: Promotion of research in the Pharma MedTech sector.