by Anjali Singh | Mumbai
India’s pharmaceutical exports have surged by 9%, outpacing the global average. India now meets 20% of global demand for generic medicines.
India’s pharmaceutical sector, the world’s largest supplier of generic medicines, is poised for a new era of growth, with pharmaceutical exports growing nearly twice as fast as the global average at a rate of 9 per cent.
India now meets 20 per cent of global demand, including 40 per cent of the US generic drug needs and 25 per cent of the UK market.
India has also surpassed the US in the number of FDA-registered generic manufacturing sites, with 752 Food and Drug Administration (FDA)-approved, 2,050 World Health Organization Good Manufacturing Practices (WHO GMP)-certified, and 286 European Directorate for the Quality of Medicines (EDQM)-approved plants as of 2024.
According to a new report by McKinsey & Company launched at the 10th Global Pharmaceutical Quality Summit, compliance outcomes have sharply improved, with US FDA ‘Official Action Indicated’ (OAI) instances dropping by 50 per cent over the past decade and European Medicines Agency (EMA) non-compliance falling by 27 per cent. Meanwhile, India continues to hold a 30–35 per cent cost advantage over US and European manufacturers due to lower labour costs, efficiency improvements, and digital adoption.
The Indian pharmaceutical sector has expanded at an 8 per cent compound annual growth rate (CAGR), twice the global average, strengthening its capabilities in active pharmaceutical ingredients (APIs) and biotechnology.
India remains a preferred outsourcing destination, with a 30–35 per cent cost advantage over Western competitors. Emerging treatments, including mRNA, cell and gene therapies, and monoclonal antibodies, are growing at a 13–14 per cent CAGR, surpassing conventional drug growth rates.
The report revealed that AI- and generative AI-driven advancements could unlock $60 billion to $110 billion in additional revenue, improve margins by 4–7 per cent, and enhance productivity by 50 per cent.
The top five Indian contract development and manufacturing organisations (CDMOs) have invested $650 million to expand their capabilities, reinforcing India’s role in global pharma supply chains.
As per the report, despite its progress, the industry faces critical challenges as it reaches a tipping point. Disruptions such as digital transformation, smart automation, and the rise of new treatment modalities could reshape pharmaceutical operations. Geopolitical shifts, nearshoring trends, and increasing sustainability demands also pose potential risks.
The report outlines eight key themes for Indian pharma companies to consider, including achieving zero-error operations, leveraging AI and digital tools, optimising production costs, and enhancing sustainability efforts.
Vishnukaant Pitty, partner at McKinsey & Company, stated: “India’s pharmaceutical industry stands strong today because of the foundation built over the last decade. With disruptions on the horizon, companies must rethink their operating models to drive high performance and sustain global leadership.”