India has successfully showcased its scientific prowess to the world through its acknowledged leadership in the global generic pharmaceuticals space. Today, one in five generics and one in two vaccines has a ‘made in India’ label. The ability to deliver high-quality medicines at affordable rates has earned India the sobriquet ‘pharmacy of the world’. It has also positioned India's pharmaceutical and biotechnology industry to generate combined revenues of $100 billion by 2025.
If the industry is to quintuple in size from the current $20 billion, it will need annual investments of $4-5 billion for the next five years. To realise this quantum of growth and absorb this level of investments, the right policy framework needs to be put in place.
Successive governments have largely ignored the pharma and biotech sector in their annual Budgets. Over-regulation, over-taxation, under-incentivisation and under-investment have steadily eroded the sector’s global competitiveness.
Out-of-the-box thinking and forward-looking policies are needed to revive the fortunes of this promising sector and return it to a high-growth trajectory.
A reform-minded new government at the Centre is best positioned to unleash the immense potential of the pharma and biotech industry and make it a shining example of a resurgent ‘Brand India’.
Blueprint for growth
Three strategic areas need immediate attention to make the Indian pharma and biotech industry globally-competitive and prime it for sustained high growth.
Manufacturing: To make India a global hub for production of small molecules (chemically synthesised) and large molecules (biologics).
Innovation: To position India at the forefront of generics, biosimilars and novel molecules R&D.
Entrepreneurship: To catapult innovative pharma and biotech start-ups to the next level by improving access to capital.
Boost for manufacturing
Manufacturing is an area where the pharma and biotech Industry has leveraged India’s cost-competitiveness to expand access and affordability of life-saving drugs to a global marketplace.
As the world’s largest producer of generic drugs with $10 billion in annual exports, India has the necessary prowess to capture a substantial chunk of the global contract manufacturing pie that is expected to grow to $50 billion by 2025. The right policy incentives can enable Indian players capture as much as a 50% share of this market in the next decade.
Keeping the large opportunity in mind, fiscal incentives should be provided to drive investments in creating global manufacturing scale. Here the special economic zones (SEZs) can play a crucial role.
Exempting pharma and biotech SEZ units from the minimum alternate tax (MAT) will make investments attractive. Extending the five-year