In a divided world disillusioned by the limits to an open system of trade and where each nation wants to be great again, the path to progress tends to hinge on the ability to stay ‘Atmanirbhar’ or ‘self-reliant.’ The words and catch phrases notwithstanding, belief in national autonomy, has stood the test of time. John Maynard Keynes, one of the most influential economists and the father of macroeconomics spoke at length on this in a lecture titled ‘national self-sufficiency’ way back in 1933.
Driven by the goal to achieve the twin objectives of higher industrial production and to make India ‘Atmanirbhar’, the government launched a Production Linked Incentive (PLI) Scheme in April 2020. It focused initially on select sectors and was subsequently extended to cover other sectors of the economy, including pharmaceuticals, automobiles and auto components, Textile Products, white goods, and specialty steel, among others.
The Pharmacy to the World
India, which is today a leading supplier of generic drugs to the world meeting over 40 per cent of generic drug demand in the United States, is one of the largest markets for Indian generic medicine with over 700 US Food and Drug Administration (FDA)-approved sites in India. But it is still dependent on China for several drug ingredients and key starting materials for making drugs.
Antibiotics – from sickness to wellness
Once a global hub for production of antibiotics (with Hindustan Antibiotics, a stellar example in the 1950s of a public sector unit in a rather challenging arena), India has over three decades lost its domestic capability to manufacture Penicillin-G (Pen-G), a critical building block for life-saving antibiotics like Amoxicillin and Ampicillin. The nation’s dependency on imports reached almost 100 per cent, leaving it vulnerable to external price shocks and supply disruptions.
The launch of the PLI Scheme for Bulk Drugs in 2020 reignited the hopes to rebuild the pharmaceutical raw material ecosystem. Among the first to respond was the Hyderabad-based Aurobindo Pharma. Through its subsidiary Lyfius Pharma Private Limited, Aurobindo established one of India’s largest fermentation-based Pen-G manufacturing facilities in Kakinada, Andhra Pradesh, with a total investment of ₹2,500 crore, according to a press release issued by the company in October last year. It was to announce the inauguration of the company’s Pen-G facility by Prime Minister Narendra Modi. The facility has an annual capacity of 15,000 metric tonnes and apparently designed to meet India’s full domestic requirement and support the production of key derivatives such as 6-Aminopenicillanic Acid (6-APA) and Amoxicillin Trihydrate (Amoxicillin TH).
But then, herein comes the hitch: Soon after the commissioning of domestic Pen-G capacity, global exporters, primarily from China, sharply reduced their export prices by over 25–30 per cent, going upto 40–50 per cent, by some estimates, coinciding with increased Chinese price aggression aimed at discouraging new domestic capacity creation. Analysts who have tracked this space often refer to an almost 40 per cent drop in price from an average around Rs 2500 /kg in March 2024 to Rs 1500/ kg in August 2025.
This, to many, mirrors the pattern witnessed in the 1990s that had once forced the shutdown of several Indian fermentation technology-based units, including the antibiotics units.
What can India and its firms do to stay self-reliant in the face of predatory pricing practices that could threaten newly rebuilt capacities, especially during the initial stabilisation phase. Typically, fermentation-based operations take 2–3 years to achieve optimal efficiency.
This poses a new challenge to the avowed goal of atmanirbhar. The question therefore many in the pharmaceutical industry and in the analysts circles is on the approach to atmanirbhar in a world where domestic production has to compete with severe price-undercutting by foreign suppliers.
Possible solutions
While one waits for policy-makers to offer the solutions. Not wanting to be named, a couple of seasoned voices from the industry moot the idea of a ‘Minimum Import Price’ (MIP) for Penicillin G, 6-APA, and Amoxicillin Trihydrate with a hope to ensure a fair, time-bound mechanism and with it a level-playing field for competition, especially crucial at a time when the PLI-scheme is in its early phase and domestic yields are yet to stabilise. Some of the other measures could be support domestic production under the PLI scheme for antibiotic fermentation, facilitating R&D and technology support for cost reduction and process innovation.
The company on its part, could focus on getting more efficient on cost of production to compete with China sustainably. Those who study manufacturing in pharmaceutical operations feel optimising fermentation productivity and raw material efficiency could also help. Some even see hope in expansion into downstream antibiotics to capture more value. Yet another option it could explore is to consider building export markets into regulated and semi-regulated geographies.
Why it all matters? The approach to self-reliance in Pen-G could not just be an antidote to dealing with artificial bitterness induced in the market by unfair competition but also help signal possible solutions for other industries seeking to pursue the Atmanirbhar journey. For the pharma industry, it could mean a chance to reclaim its leadership in essential medicine (like penicillin API) manufacturing while also staying responsible, competitive and sustainable.
One underlying message that often gets missed, says a veteran economist, is that of speed. Perhaps there is a signal in this to policy-makers on the time-sensitivity of decisions that have economic and cost implications. Not all decisions that take time are best and not every file that moves slowly will unfold a winning proposition.
