Driving innovation and R&D in the Indian pharma sector

The CDSCO implemented the New Drugs and Clinical Trial Rules, 2019 which introduced major changes to the regulatory framework which governs clinical trials in India.

Driving innovation and R&D in the Indian pharma sector
The concept of incubators for innovation has taken off in India in recent years. (File)

By Shridhar Narayanan

The Indian pharma industry has been rightfully recognized as “the pharmacy of the world” as it consistently supplied medicines to over 200 nations worldwide during the pandemic. However, the overall growth of the industry was restricted as other chronic diseases got sidelined due to the pandemic. While the Indian Pharma industry leads in volume globally, we are still on the margins in creating value through innovative technologies such as new molecular/biological entities, cell and gene therapy, and precision medicines. The sector aspires to grow to USD 120-130 bn, Number 1 in volume (current rank 3), and among the top 10 in value (current rank 14) by 2030. To address the unmet needs of patients across the world and enhance the industry’s position globally, India must focus on innovation which accounts for two-thirds of the global value pool. India has several strengths to leverage and a strong starting position to build on as it looks to evolve beyond its journey of ‘Make in India’ towards the vision of ‘Discover and Make in India.’

Key drivers for building an innovationecosystem

India improved its ranking in the Global Innovation Index (GII) 2021 report to climb to 46th position from the 81st position in 2015 according to the World Intellectual Property Organisation (WIPO). Globally, countries which have been successful in leading the innovation index have focused mainly on the following 4 pillars of innovation –

Incentivizing funding for Innovation and R&D

In the pharmaceutical industry, the gestation period from concept to market may take about 10-15 years, with a >90% attrition rate. The appetite for accepting this high failure rate and funding mid to late-stage development has been a challenge in India. For the investments to leapfrog on the early innovation, the risk capital needs to be created in India. The average industry funding in the area continues to be around 10%, compared to 15-20% for most large innovators globally. Funding from the Government often comes in the early innovation in the drug discovery or device development space through grants, mainly from BIRAC (e.g., the Biotechnology Ignition Grant) and MEiTY, which typically have a quantum of about Rs 5-50 lakhs over 6-18 months. While these grants are beneficial to spur innovation, they are insufficient for the long-term vision of funding the entire development cycle. According to UNESCO’s report in 2018, India’s spending on R&D is currently low at 0.7% of GDP compared to developed countries like the US which is at 2.8%. Other funding institutions from the public and private sectors (PE/VC) and Indian pharma companies must be incentivized to enter the fray to enable the movement from early innovation to late development. A case in point has been the development of Covid vaccines (e.g. Covaxin) which has been a successful public-private partnership.

Strengthening Industry-Academia Collaboration

Strengthening academic-industry linkages and attracting talent from both digital and life sciences backgrounds will be vital in enhancing capabilities across the industry’s value chain, from new drug development to manufacturing. Globally, pharmaceutical and biotech companies have aligned with the academic research ecosystem. It is important to learn from successful partnerships such as Astra Zeneca and the University of Cambridge, Novartis and Harvard/MIT, Amgen and the University of Ireland, or Biopolis and NUS in Singapore. Most importantly, creating an empowering infrastructure for technology transfer and setting up industry-sponsored centres of excellence will be critical. A notable example is the Massachusetts Institute of Technology, USA, a leading-edge Lifesciences innovation hub with a massive Technology Transfer support network, which filed over 400 US patents and concluded more than 100 license agreements in 2021. Incorporating a Bayh-Dole Act-like provision would facilitate “Lab-to-Market” initiatives and propel the commercialization of innovations from Indian academia and research institutes.

Building the Infrastructure

The concept of incubators for innovation has taken off in India in recent years. Over a hundred incubators have been set up across the country to provide space, infrastructure, and occasionally, seed funding to the start-up world. The Government has set up several of these incubators through BIRAC funding not only in Tier 1 (CCAMP in Bangalore) but also in Tier 2 (KIIT in Bhubaneshwar) and Tier 3 cities (MABIF in Madurai). This year, the Atal Innovation Mission launched Phase 1 of the second edition of the Atal New India Challenge (ANIC 2.0) to handhold path-breaking innovations. Capacity building, such as incubators that support small innovators and the setup of innovation hubs, will be crucial in spurring innovation and R&D. This presents an opportunity for the Indian pharma companies working on expanding their product portfolio. Industry can potentially collaborate with Government in supporting infrastructural advancements that directly lead to a more vibrant and innovative start-up ecosystem. Examples of such initiatives are incubator development, upgradation of the quality of infrastructure in national labs, and ramp-up of capabilities for the new types of testing methodologies (e.g., biosafety level 3 laboratories for pandemic preparedness).

Enabling Regulatory Ecosystem

The CDSCO implemented the New Drugs and Clinical Trial Rules, 2019 which introduced major changes to the regulatory framework which governs clinical trials in India. This resulted in a predictable, transparent system with an online registry and reduced approval timelines. The waiver for local clinical trials under certain conditions would enable better access to critical medicines for Indian patients. However, these changes have not brought about the expected spurt in clinical trials in India. The Covid-19 pandemic has also not helped with the revival of the clinical trial industry. A concerted effort from the regulators and industry to streamline the regulatory pathway for new drugs will enable faster approval and accelerate the process of clinical trials and encourage local drug development. Looking forward, a simplified and overarching regulatory system would facilitate that ease of doing research and development. Segregating the approval processes for generics and innovative products would boost companies’ investment in research.


Today, while we enter the post-pandemic era, healthcare continues to be in focus, and the Indian pharma sector is at an inflection point where it has been recognized as a reliable global player providing quality medicines. It is imperative to move from being a volume provider to being a value creator. In the last two years, we have witnessed nations prioritizing healthcare, reinvesting in their health budgets, forging new healthcare alliances with other countries, and companies and start-ups developing indigenous solutions for testing and critical care. While the Indian government should provide the necessary incentives to accelerate innovation and fund development, the Indian Pharmaceutical sector should also pursue an aggressive partnership strategy for growth and double down on research and lead the path of innovation. The industry should also increase its risk appetite by in-licensing technologies and assets from start-ups thus providing exits for early-stage investors and giving more confidence to VC funds for investing in biotech. The time is right for Indian pharmaceutical innovation to take its place in the global arena and requires support from the government and industry to make it a reality.

(The author is Senior Technical Advisor (Innovation), Indian Pharmaceutical Alliance. Views expressed are personal and do not reflect the official position or policy of

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