13-March -2025-Special-Article

INDIA’S PHARMACEUTICAL INDUSTRY AND TRADE POLICIES

India’s pharmaceutical sector is a major player in the global market, particularly in supplying generic medicines and vaccines. The Indian Pharmaceutical Alliance (IPA) has recently proposed removing customs duties on U.S. medicine imports to maintain strong trade relations and prevent retaliatory tariffs. This move is crucial to sustaining India’s dominance in the American pharmaceutical market while addressing domestic and global industry challenges.

Why is the IPA Advocating for Zero Import Duties?

1. Significance of the U.S. Market
   • The U.S. imports approximately $9 billion worth of pharmaceutical formulations from India each year.
   • This accounts for one-third of India’s total pharma exports.
2. Trade Balance and Reciprocal Tariffs
   • Lower import duties on medicines can prevent retaliatory U.S. tariffs on Indian pharmaceuticals.
   • Encourages stronger trade relations between India and the U.S.
3. Concerns Over Patent Laws
   • The U.S. has pushed for amendments to India’s Patents Act, 1970, particularly Section 3(d), which restricts patenting minor modifications of existing drugs (evergreening of patents).
   • Weakening Section 3(d) may reduce access to affordable generic medicines and impact India’s pharmaceutical industry.

About India’s Pharmaceutical Industry

1. Global Standing
   • 3rd largest producer of medicines by volume.
   • 14th largest in terms of value.
   • Supplies over 50% of the world’s vaccines and 40% of generic medicines to the U.S.
2. Industry Size and Growth
   • Estimated market value of $50 billion (FY 2023-24).
   • Projected to reach $130 billion by 2030.
   • Biotechnology sector valued at $137 billion (2022), with a target of $300 billion by 2030.
3. Key Segments
   • Generic Medicines: India is the world’s largest supplier, fulfilling 20% of global demand.
   • Active Pharmaceutical Ingredients (APIs): Produces over 500 APIs, covering 8% of the global API market.
   • Medical Devices: Market expected to grow from $11 billion to $50 billion by 2030.
4. Growth Drivers
   • Affordable Medicines: Indian drugs are significantly cheaper than those from Western countries.
   • Government Support: Initiatives like the Production-Linked Incentive (PLI) Scheme encourage local manufacturing.
   • Research & Development (R&D):
     • India ranks 6th globally in patent applications.
     • 64,480 patent filings in 2023 indicate strong innovation capacity.
   • Increasing Global Demand:
     • Aging populations and rising chronic diseases are driving demand for cost-effective medications.

5. Pharmaceutical Exports
   • Medicines are exported to over 200 countries.
   • FY24 exports reached $27.82 billion.
   • India ranks 12th in global medical goods exports.

Challenges Facing the Indian Pharma Industry

1. Quality Concerns
   • Cases like the Gambia cough syrup deaths (2022) have raised global concerns over Indian drug quality.
2. Regulatory Challenges
   • Compliance with evolving Good Manufacturing Practices (GMP) is costly.
   • Delays in approvals for new drug formulations affect market entry.
3. Dependence on API Imports
   • 70% of APIs are imported, primarily from China.
   • This creates vulnerabilities in supply chains.
4. Pricing Regulations
   • National List of Essential Medicines (NLEM) imposes price controls that reduce profit margins.
   • Limits incentives for pharmaceutical companies to invest in R&D.
5. Global Competition
   • Rising competition from China, the U.S., and the EU.
   • Vietnam and Indonesia emerging as alternative pharma manufacturing hubs.
6. Skilled Workforce Shortages
   • Need for trained professionals in biotechnology, biosimilars, and drug discovery.
   • Over-reliance on generic drugs instead of investing in innovative formulations.

Way Forward:

1. Boosting Domestic API Manufacturing
   • Expanding PLI 2.0 and Bulk Drug Parks.
   • Encouraging fermentation-based APIs and green chemistry to reduce import dependence.
2. Expanding into High-Value Drug Markets
   • Investment in gene therapies, personalized medicine, mRNA vaccines, and specialty drugs.
3. Enhancing Research & Development
   • Tax incentives and research grants to encourage pharma innovation.
   • AI-driven drug discovery and telemedicine to improve healthcare delivery.
4. Regulatory and Quality Improvements
   • Faster approvals for biosimilars, innovative drugs, and breakthrough therapies.
   • Strengthening drug safety monitoring to enhance global credibility.
5. Global Market Expansion
   • Increasing pharma exports to Africa, Latin America, and ASEAN nations.
   • Strategic trade deals and overseas manufacturing partnerships to reduce trade barriers.

Conclusion

India’s pharmaceutical industry is a key player in the global market, supported by cost-effective drug production, strong exports, and government incentives. However, challenges such as API import dependence, quality concerns, regulatory issues, and rising competition must be tackled. Strengthening domestic API manufacturing, promoting innovation, and expanding market presence will ensure that India continues to lead in the global pharmaceutical sector while maintaining robust trade relations with key markets like the U.S.

Mains Question:

1. Discuss the significance of India’s pharmaceutical industry in the global market and analyze the challenges it faces in maintaining its competitive edge. (150 WORDS)