India’s pharmaceutical industry stands at a crossroads. For decades, the country has dominated global generic drug production, earning its reputation as the world’s pharmacy. Yet this comfortable position masks a critical vulnerability: the absence of a complete drug innovation ecosystem.
While India supplies over 60% of global vaccines and churns out affordable medicines for millions, it lags dramatically in discovering breakthrough therapies. The sector now faces mounting pressure from protectionist trade policies, emerging health threats, and the global race towards biologics and AI-driven drug development. Building an end-to-end innovation ecosystem—one that seamlessly connects research laboratories to manufacturing floors and patients—isn’t merely an aspiration anymore. It is an urgent necessity if India wants to remain relevant in the rapidly evolving pharmaceutical landscape of the 2030s.
Current Position: Strong Foundation, Critical Gaps
India’s pharmaceutical sector already commands an impressive global standing, ranking among the top twelve biotechnology destinations worldwide. The industry reached a valuation of $130 billion during 2024 and projects growth to $300 billion by 2030. Indian companies contribute roughly 20% of the global biosimilar pipeline, demonstrating capability in complex biological manufacturing.
However, the statistics reveal uncomfortable truths. Approximately 70% of India’s pharmaceutical exports remain traditional generics, reflecting limited innovation-led growth. Indian biosimilars represent less than 5% of the global market despite the country’s manufacturing prowess and cost advantages. The gap between potential and performance remains stark.
India invests close to $100 billion in pharmaceutical research and development, yet much of this capital flows toward manufacturing improvements and incremental modifications. Genuine drug discovery—the high-risk, high-reward process of identifying novel therapeutic molecules—receives comparatively modest attention. The ecosystem suffers from fragmented infrastructure where academic researchers struggle to connect with commercial partners.
Translational research hubs—facilities that bridge laboratory discoveries and clinical applications—remain insufficient. Regulatory complexities further slow the journey from promising compound to approved medicine. These structural weaknesses prevent India from capturing the full value chain of pharmaceutical innovation, leaving money on the table while competitors advance.
Building Blocks: What India Must Construct
Creating a globally competitive drug innovation ecosystem requires coordinated action across multiple fronts, each demanding sustained investment and institutional reform.
Academia-industry collaboration forms the foundation. Programs like the National Biopharma Mission and BIRAC initiatives have fostered some connections, but these efforts need dramatic scaling. Converting early-stage academic discoveries into viable drug candidates demands deeper coordination, shared infrastructure, and aligned incentives between universities and pharmaceutical companies.
Clinical trial infrastructure presents another bottleneck, despite India’s enormous, diverse patient population—a natural advantage for conducting trials. Enhanced facilities, streamlined regulatory approvals, and the adoption of digital tools—including real-world evidence platforms—can accelerate clinical validation. Faster, more efficient trials improve global competitiveness.
Regulatory harmonization with international standards is progressing. India increasingly aligns with ICH guidelines and risk-based regulatory frameworks, but transparent, predictable, and faster regulatory pathways remain essential. These improvements attract global partnerships and speed market access for Indian innovations.
Capital and policy support must continue expanding. Government schemes like PRIP, which allocates ₹5,000 crore in funding, alongside production-linked incentives, provide crucial backing. Private sector investment in biotechnology and AI-based drug discovery must complement public funding to sustain long-term innovation momentum.
Digital Innovation: The AI Advantage India Cannot Ignore
Artificial intelligence and machine learning technologies are fundamentally reshaping how new drugs are discovered, dramatically reducing timelines and costs. India’s extensive digital health initiatives, particularly the Ayushman Bharat Digital Mission, create valuable infrastructure supporting AI-assisted compound screening and disease surveillance.
Indian startups pioneering AI-based drug discovery demonstrate impressive technical capabilities but frequently struggle to scale. Limited risk capital and complex regulatory environments constrain their growth potential. Many promising ventures remain stuck between proof-of-concept and commercial viability.
Collaboration between digital innovators and traditional pharmaceutical companies offers the most promising path forward. Established pharmaceutical firms possess manufacturing capabilities, regulatory expertise, and market access that startups lack. Meanwhile, startups bring cutting-edge computational approaches and entrepreneurial agility. Combining these strengths can accelerate the journey from laboratory benches to patient bedsides.
The Path Forward: Innovation Rooted in Real Needs
India’s pharmaceutical innovation strategy must balance global market ambitions with local healthcare realities. The country’s diverse disease burden offers unique opportunities for developing affordable, novel therapies targeting antimicrobial resistance, rare diseases, and pediatric formulations often neglected by Western pharmaceutical companies.
Nafithromycin, India’s first domestically discovered novel antibiotic, illustrates what mission-oriented research combined with ecosystem support can achieve. This success story demonstrates that Indian institutions possess the scientific capability to deliver impactful innovations when properly resourced and coordinated.
Building patient and provider awareness, fostering international collaborations, and developing balanced intellectual property regimes will be crucial. IP frameworks must encourage innovation through appropriate protections while facilitating access to essential medicines—a delicate balance requiring thoughtful policy design.
The PRIP scheme’s five-year implementation roadmap provides a concrete framework for ecosystem development. Supporting nine established pharmaceutical companies, funding thirty high-potential research projects, and backing 125 startup ventures represent meaningful progress. Infrastructure upgrades—including Biofoundry units and Bio-Artificial Intelligence hubs—will provide critical capabilities.
India’s pharmaceutical sector possesses the talent, manufacturing scale, and market understanding necessary for global leadership in drug innovation. What is missing is the connective tissue—the institutions, policies, and collaborations that transform individual strengths into a cohesive ecosystem. Building this infrastructure won’t happen overnight, but every year of delay allows competitors to widen their lead. The clock is ticking.