Productivity ramps up with Indian pharmaceutical cluster


The Indian Pharma Inc. ranks 5 in the pharma sector globally. The ranking is in terms of volume of production. This ranking and establishment accounts for 10% of global production and gives India recognition worldwide in the pharmaceutical sector. Considering the depth of the pharma industry in India, the turnover itself speaks of large numbers.

During the 1980s what started as US $ 0.3 Million industry now proudly stands at a turnover of US $ 65 Billion.

Considering the huge capital and turnover of the industry and according to the Department of Pharmaceuticals, the Indian pharmaceutical industry employs about 340,000 people and an estimated 400,000 doctors and 300,000 chemists.

Industry structure

The Indian pharmaceutical industry is fragmented with thousands of manufacturers in the organized and unorganized segments. The produce of the Indian pharmaceutical industry can be broadly classified into bulk drugs, active pharmaceutical ingredients or API and formulations. Of the total number of pharmaceutical manufacturers, about 77% produce formulations, while the remaining 23% manufacture bulk drugs.

Foreign Investment in the Indian pharmaceutical industry

100% foreign direct investment (FDI) is valid in the drugs and pharmaceuticals sector, including involvement of recombinant technology. The drugs and pharmaceuticals industry allured foreign direct investment to the tune of US$ 9.17 billion for the period between April 2000 and January 2012. The Indian pharmaceutical industry enjoys certain advantages, which attracts FDI in the country:

 1) cheap innovations and capital expenditure which provides leverage in pricing of drugs 2) transparency in the regulatory aspects 3) convincing track record in bulk drug and formulation patents 4) firm domestic support in production, from raw material needs to finished goods and 5) The emergence of India as a hub for contract research, bio-technology, clinical research and clinical data management.

Furthermore, the Govt. itself is backing up the growth and has taken a few initiatives. Some such initiatives include:

1) Approving 100% FDI under the automatic route in drugs and pharmaceuticals including those involving use of recombinant technology

2) Also, Increasing weighted tax deduction on expenditure in in-house R&D activities to 200% in the Budget 2010 and

3) Setting up a US$ 639.56 million venture capital fund to support drug discovery and strengthen pharmaceutical infrastructure.


The growth scenario for the pharmaceutical industry is affirmative. The rise in demand for generics over the years shall greatly benefit the manufacturers in the field. The industry can be driven on the following important points: 1) cheap operations 2) research based operations 3) advancements in API and 4) skilled manpower is easily available.

The indigenous formulations and bulk drugs markets are choked with price pressure as benefits of cheaper drugs have been shifted to end-users and trade channels. Hence, alliances are expected to gather momentum in the near future. Patent expiry of branded drugs would bring about an increase demand for generic drugs. This promises great opportunity to the domestic pharma companies. Other factors like higher reach in the global market also are a contributing aspect in the growth of the industry.