Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030

Indian pharmaceutical industry to meet an ambition of US$130 billion by 2030 through innovation-led growth: EY-FICCI report

• To reach US$ 130 bn in size by 2030 from the current US$42 bn the Indian pharmaceutical (pharma) industry will require to double the last decade’s growth rate of 6% to 12%
• Innovation led research and development, healthcare delivery, manufacturing and supply chain, and market access are the areas to be focused for growth
• The Indian pharma industry caters to over 60% of the global vaccine demand, supplies over 40% of the generics in the US and about 25% of the prescription drugs in the UK. The global pharmaceutical trade is expected to reach a size of US$1-1.3 trillion by 2030 and the ambition is to garner a global share of 6-7% by value

The Indian pharma industry should consolidate on its advantages and undertake fundamental reforms to reset on innovation-led industrial growth to meet the ambition of US$130b by 2030 says the EY-FICCI report titled, ‘Indian Pharmaceutical Industry 2021: future is now.’ This report reassesses the Indian pharma industry’s positioning and defines India’s ambition by 2030 by identifying a set of imperatives for all stakeholders – the Government, pharma and healthcare industry leaders, functional experts of the pharma industry and experts in the allied sectors. 

The pandemic has highlighted the growing complexity of challenges that lie ahead and the need to strengthen India’s capabilities over the next decade to respond to them adequately. The Indian pharma industry has grown at a compounded growth rate of (CAGR) of ~11% in the domestic market and ~16% in exports over the last two decades. The overall growth has been driven by the industry’s leadership in supplying generic formulations to markets across the globe. In the 2020-2030 period, it is envisaged that the Indian pharma industry will grow at a CAGR of ~12% to reach US$130 bn by 2030 from US$41.7 bn in 2020. Though the pharma industry has grown at a CAGR of approximately 13% over the two decades, in the last decade it was ~ 8.5% and has been lower at ~6.2% over the past five years.

Sriram Shrinivasan, Global Generics and National Health and Lifesciences Leader, EY, says, “The pandemic has revealed the importance of digital in all walks of life. This fits in well with two sectors that India is strong in — Technology and Pharmaceuticals and the convergence of both these strengths could make India a leader in the Healthcare of tomorrow. We must take upon ourselves a moon-shot target for the pharma industry in India, whereby all stakeholders come together on one platform and take a pledge of commercialising indigenous novel drugs (both biological and chemical). We must build efficiencies across the pharmaceutical value chain, adopt technology, be globally competitive, create newer markets for branded and speciality pharma, complex APIs and build to scale differentiated innovative drugs to meet the collective ambition of all stakeholders.”

Mr Pankaj Patel, Mentor, FICCI Pharma Committee and Chairman & Managing Director, Zydus Cadila said, “An increase in spending by the government on healthcare and investment is necessary with a policy that is clear and coherent resulting in the sustainability of the industry. Upscaling the people’s talent and getting regulatory system on a global level is need of the hour.” 

With estimates that the Indian pharma industry supplies over  40% of generics in the biggest pharma market – the US and about 25% of the prescription drugs in the UK, along with catering to over 60% of the global vaccine demand, India is one of the leading suppliers of pharmaceuticals in the world.  While the global formulations trade value is about US$652 billion (2019), India’s share of exports in the global trade was only about 2.5%. With increased pricing pressure on the global generics trade as well as increased competition in India’s established export corridors, the current portfolio of products is expected to further extend this divide. The global pharmaceutical trade is expected to reach a size of US$1-1.3 trillion by 2030, the ambition is to garner a global share of 6-7% by value to attain a size of ~US$73 billion.

The opportunities that have emerged to accelerate the growth of Indian pharmaceutical and healthcare industry are – innovation-led research and development, healthcare delivery (R&D), manufacturing and supply chain, and market access. 

Accelerating research and innovation:

• There is a need to move up India’s share of trade-in value
• To meet this objective, the industry must consider setting up an overarching regulatory body and a central body to streamline research infrastructure and financing from all government bodies, to explore new models for financing R&D to increase private investments and also make available funds for high risk and long term projects, improve industry-academia collaboration and establish a strong innovation ecosystem.

Achieving equitable and sustainable healthcare:

• The increased acceptability of digital technologies has the potential to improve healthcare delivery. This explores the progress towards achievement of universal healthcare access, establishing efficient processes like the use of Aadhar card to identify and simplify the delivery based on healthcare coverage category.
• Enabling teleconsulting and focusing on preventive healthcare are some other areas for consideration with the role of the industry, government, healthcare sector and insurers carved out.

Strengthening manufacturing and supply base in domestic and global markets:

• The focus of manufacturing and supply chain initiatives would be to develop capabilities in APIs and enable the manufacturing of complex generics. Ease of doing business is a critical enabler to set up world-class manufacturing facilities.
• The attractiveness of the manufacturing sector too needs to be enhanced in order to attract the best talent in India and abroad.
• Given the growth ambitions, it is vital to encourage and setup pharma machine manufacturing facilities in India to lower fixed costs, enable savings in forex and reduce time to set up additional facilities.
• There is also a need to bolster the logistics infrastructure for connecting the key pharma hubs in the country in order to facilitate quick and cost efficient movement of goods including cold chain facilities

Improving access to medicines:

• The market access to prescription drugs needs to improve in the country

• Various global best practices in drug pricing and procurement models can be contextualized for developing geographies Digital marketing of pharma products too must be considered

In order to attain self-sufficiency and be the real pharmacy of the world, the country needs to focus on avenues of strategic and economic significance to feed the growth engine of this industry. Realizing this ambition will need a concentrated effort from all key stakeholders– the payers, providers, policymakers, physicians, pharma industry players, academia as well as a plethora of service providers across the logistics and distribution, capital pools, packaging and other auxiliary industries.