Pharmaceuticals: the pharmacy of the world

India is the world's third-largest producer of pharmaceuticals by volume and fourteenth by value, according to the Commerce Secretary's statement reported by the Press Information Bureau. The gap between the two rankings tells the story: India makes very large quantities of medicines, especially generics, at low prices, so its share of world output by volume is much larger than its share by sales value. More than 3,000 companies and 10,500 manufacturing units were cited in the same statement, producing tens of thousands of generic brands.

Generics are medicines made after the original patent expires, containing the same active ingredient as the branded drug. India's strength in generics grew from the Patents Act of 1970, which for pharmaceuticals allowed process patents but not product patents for many years, letting Indian firms develop their own processes for making known drugs. The product patent regime introduced in 2005 changed the rules, and the balance between patent protection and affordable access has been debated ever since, notably in the Supreme Court's 2013 decision rejecting a patent claim for a cancer drug under Section 3(d) of the Act.

Regulation is split in a way that matters for quality. The Central Drugs Standard Control Organisation sets standards and approves new drugs, while state drug controllers license manufacturing units. Price control for essential medicines is exercised through the National Pharmaceutical Pricing Authority under the Drugs (Prices Control) Order. The Jan Aushadhi scheme, launched in 2008, sells generic medicines at lower prices through dedicated stores, aiming to make the price advantage of generics reach patients directly.

Exports are central: pharmaceutical exports stood at 30.47 billion US dollars in 2024-25, up 9.4 per cent on the previous year, as reported by the Press Information Bureau. The United States and Europe are major markets, which means Indian plants are inspected by foreign regulators and quality failures can cost market access. Dependence on imported active pharmaceutical ingredients, especially from China, is the main supply-chain vulnerability, and production-linked incentives have been used to encourage domestic production of key ingredients and high-value drugs.

The policy tension is therefore threefold: keep medicines affordable at home, keep quality high enough for the strictest export markets, and build capacity in ingredients and innovation so that India moves from the world's pharmacy in volume to a stronger position in value and in new drug discovery.