E-ISSN:2583-553X

Research Article

Pharmaceutical Sector

Applied Science and Biotechnology Journal for Advanced Research

2025 Volume 4 Number 1 January
Publisherwww.vandanapublications.com

A Case Study on Pharmaceutical Sector: Indian Context

Pandey RK1*, Modh T2
DOI:10.5281/zenodo.14728984

1* Rajesh Kumar Pandey, Associate Professor, SSR IMR, Silvassa, India.

2 Tyagi Modh, Student, MBA, Sem III (HR), SSR IMR, Silvassa, India.

The Indian pharmaceutical sector has recorded a remarkable growth with tremendous scope of service offering and employment. The sector ranks as the third-largest pharmaceutical market globally by volume and 14th by value, playing a critical role in making healthcare accessible worldwide. With over 10,000 manufacturing units and more than 3,000 pharmaceutical companies, India is a major exporter of medicines, supplying over 200 countries, including highly regulated markets like the United States and the European Union. Additionally, India’s adherence to stringent global standards, such as those set by the U.S. Food and Drug Administration (FDA) and the World Health Organization’s Good Manufacturing Practices (WHO-GMP), has cemented its reputation as a reliable supplier of safe and effective pharmaceuticals. (www.ibef.org, 2024)

The Indian pharmaceutical firms have consistently prioritized quality, resulting in the production of affordable yet reliable medicines. India’s pharmaceutical sector is also experiencing a digital transformation, integrating cutting-edge technologies to enhance efficiency and patient care. This case study explores the Indian pharmaceutical sector, focusing on its current status, associated dilemmas, and strategies to address them. It provides insights into the dynamics of the industry within the Indian context, offering a practical understanding for students, business owners, and executives in the pharmaceutical sector. The case literature also contributes Teaching Notes at the end of the case for the case Instructors referring the case.

Keywords: indian pharma sector, biologics and biosimilars, production linked incentive (pli) scheme, e-pharmacy, healthcare innovation, regulatory challenges, drug discovery, pricing regulations

Corresponding Author How to Cite this Article To Browse
Rajesh Kumar Pandey, Associate Professor, , SSR IMR, Silvassa, , India.
Email: 		Pandey RK, Modh T, A Case Study on Pharmaceutical Sector: Indian Context. Appl. Sci. Biotechnol. J. Adv. Res.. 2025;4(1):10-17.
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https://abjar.vandanapublications.com/index.php/ojs/article/view/83

Manuscript Received Review Round 1 Review Round 2 Review Round 3 Accepted
2024-11-21 2024-12-18 2025-01-16
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© 2025by Pandey RK, Modh Tand Published by Vandana Publications. This is an Open Access article licensed under a Creative Commons Attribution 4.0 International License https://creativecommons.org/licenses/by/4.0/ unported [CC BY 4.0].

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1. About the Pharmaceutical Sector

The Indian pharmaceutical industry is a cornerstone of global healthcare, renowned for its ability to produce affordable, high-quality generic medicines and vaccines. It ranks as the third-largest pharmaceutical market globally by volume and 14th by value, playing a critical role in making healthcare accessible worldwide. With over 10,000 manufacturing units and more than 3,000 pharmaceutical companies, India is a major exporter of medicines, supplying over 200 countries, including highly regulated markets like the United States and the European Union. India’s adherence to stringent global standards, such as those set by the U.S. Food and Drug Administration (FDA) and the World Health Organization’s Good Manufacturing Practices (WHO-GMP), has cemented its reputation as a reliable supplier of safe and effective pharmaceuticals. India’s expertise in generic drug manufacturing is unparalleled, providing nearly 60% of the global demand for vaccines and about 20% of the global supply of generic medicines. This dominance in the generics market is due to the country's historical emphasis on producing cost-effective alternatives to patented drugs. Key reforms, such as the Patent Act of 1970, enabled Indian manufacturers to produce and market generic versions of patented medicines, allowing them to compete on a global scale.(www.ibef.org, 2024)

The sector's growth is further supported by a robust research and development (R&D) infrastructure. India is home to leading research institutions and a thriving biotech industry that drives innovation in drug development, particularly in fields like biotechnology, biosimilars, and complex generics. Indian pharmaceutical companies have increasingly shifted focus toward R&D, investing in the discovery of new drugs and the development of advanced therapies. This strategic shift aims to reduce the innovation gap compared to Western counterparts, allowing India to venture beyond generic production into novel drug discovery and biologics. The government has played a vital role in nurturing the pharmaceutical sector through policies and initiatives that foster growth and innovation. Measures like the Production Linked Incentive (PLI) scheme encourage domestic manufacturing,

particularly in the production of Active Pharmaceutical Ingredients (APIs) and key starting materials. These efforts aim to reduce India's dependency on imports, especially from China, and enhance self-reliance in critical areas of pharmaceutical production.

India’s pharmaceutical sector is also experiencing a digital transformation, integrating cutting-edge technologies to enhance efficiency and patient care. The rise of digital health platforms, e-pharmacies, telemedicine, and health data analytics is reshaping the industry. Companies are leveraging technologies like artificial intelligence (AI), big data, and machine learning for drug development, diagnostics, and personalized medicine, setting the stage for a tech-driven healthcare ecosystem.(www.globalpharmatek.com, 2024)

2. Current Status of Pharmaceutical Sector

The Indian pharmaceutical sector is a dynamic and rapidly growing industry that has shown impressive resilience and adaptability over recent years. Currently valued at approximately USD 42 billion, the sector is projected to grow significantly, reaching USD 65 billion by 2024 and potentially USD 120-130 billion by 2030. (https://efpia.eu, 2024)This growth is fuelled by several key factors, including increased healthcare spending, the rising burden of chronic diseases, and the expanding global demand for affordable and effective medicines. India’s prominence as a global supplier of generic drugs and vaccines has positioned it as a crucial player in both developing and developed markets.

1. Enhanced R&D Investments

Indian pharmaceutical companies are progressively investing in research and development (R&D) to drive innovation and stay competitive. Historically focused on generics, the sector is now allocating more resources towards the development of new drugs, complex generics, biosimilars, and specialty medicines. Major players like Dr. Reddy's Laboratories, Sun Pharmaceuticals, and Biocon are leading the way in this transformation, aiming to reduce the innovation gap with global competitors.


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2. Biologics and Biosimilars Developments

With the global healthcare landscape moving towards personalized and precision medicine, Indian pharmaceutical companies are increasingly focusing on biologics and biosimilars. Biologics—therapies derived from living organisms—are complex, high-value medicines, while biosimilars are generic equivalents of biologics. Indian firms are leveraging their expertise in generics to enter this lucrative market, which offers higher profit margins compared to traditional generics. The shift towards biologics is also a strategic move to diversify product portfolios and enhance global competitiveness.

3. Development of Digital Health and Technology

Digital transformation is revolutionizing the Indian pharmaceutical sector, with digital health, telemedicine, e-pharmacy, and data analytics becoming integral to operations. The COVID-19 pandemic accelerated the adoption of digital tools, facilitating remote consultations, diagnostics, and patient care. Pharmaceutical companies are increasingly utilizing technologies like artificial intelligence (AI), machine learning, and big data to improve drug discovery processes, optimize supply chain management, and enhance patient engagement. This digital shift is expected to continue, driving efficiency and innovation across the industry.

4. Self-Reliance in API Manufacturing

India’s heavy reliance on imported Active Pharmaceutical Ingredients (APIs), especially from China, has been a significant vulnerability for the sector. Approximately 70% of India’s API requirements are imported, which poses risks in terms of supply chain stability and national security. To address this, the Indian government has introduced incentives like the Production Linked Incentive (PLI) scheme, aiming to boost domestic API manufacturing.

5. Government Initiatives and Policy Support

The Indian government has played a pivotal role in fostering the growth of the pharmaceutical sector through supportive policies and initiatives. Key measures include the “Pharma Vision 2020” program, which was a success in promoting drug manufacturing and innovation.

has also introduced the “Atmanirbhar Bharat” (Self-Reliant India) campaign, encouraging domestic manufacturing of critical drugs and reducing import dependency. Additionally, schemes like the PLI initiative are designed to incentivize manufacturing excellence and drive investments in high-priority areas such as APIs and medical devices.

6. Development in Export Performance

India is a leading exporter of pharmaceuticals, supplying affordable generic drugs and vaccines to over 200 countries worldwide. The Indian pharmaceutical sector accounts for 20% of the global supply of generic medicines and 60% of the global demand for vaccines, solidifying its position as the “Pharmacy of the World.” The United States, Europe, and Africa are key export destinations, with India’s pharmaceutical exports reaching USD 24.4 billion in 2022. This robust export performance underscores India’s ability to meet global healthcare needs, particularly in developing regions.

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Chart No.1: Key Trends shaping the Pharma Sector
Source: Authors’ Understanding

4. Impact of the Covid-19 Pandemic

The COVID-19 pandemic had a profound impact on the Indian pharmaceutical sector, highlighting both strengths and weaknesses. On the one hand,


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Pandey RK et al. A Case Study on Pharmaceutical Sector: Indian Context

it showcased India’s capability to respond swiftly to a global health crisis by scaling up the production of essential medicines, vaccines, and diagnostics. India’s success in developing and manufacturing COVID-19 vaccines like Covaxin and Covishield within a short timeframe demonstrated the sector's manufacturing competence. On the other hand, the pandemic exposed vulnerabilities in the supply chain, particularly the dependency on imported APIs, prompting the government and industry to prioritize self-reliance.

5. Current Challenges and Opportunities

While the sector is poised for substantial growth, several challenges remain:

  • Regulatory Hurdles: Navigating complex regulatory requirements, both domestically and internationally, can delay market entry and increase costs for Indian pharmaceutical companies.
  • Innovation Gap: Despite recent investments in R&D, the sector still lags in novel drug discovery compared to Western counterparts, focusing primarily on generics and biosimilars.
  • Pricing Pressures: Government-imposed price controls on essential medicines continue to strain profit margins, urging companies to balance affordability with innovation.

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Chart No.2: Key Challenges of Pharma Sector
Source: Authors’ Understanding

Opportunities are plentiful. The push for biopharmaceutical innovation, expansion into emerging markets, and ongoing digitalization efforts are expected to propel the sector forward. Additionally, increased focus on healthcare infrastructure and rising awareness of preventive care creates new avenues for growth.

6. The Recent Encounter of Pharmaceutical Sector

The Indian pharmaceutical sector has undergone significant changes in recent years, driven by a mix of regulatory reforms, quality assurance measures, and global market dynamics. A pivotal focus has been on enhancing quality standards and aligning with international benchmarks, particularly following increased scrutiny from global regulatory agencies like the U.S. FDA. The Central Drugs Standard Control Organization (CDSCO) has played a crucial role in this transformation, implementing stricter Good Manufacturing Practices (GMP) to ensure the safety and efficacy of pharmaceuticals. One of the critical steps taken has been the introduction of enhanced pharmacovigilance measures, allowing for better monitoring of adverse drug reactions, which is crucial for maintaining high safety standards. Moreover, the government has launched an online system for import and registration processes to streamline the supply chain and maintain traceability of pharmaceutical products. (https://cdsco.gov.in, 2024)

Counterfeit and substandard medicines have posed a persistent challenge in the sector. In response, CDSCO has intensified inspections of manufacturing facilities and retail outlets, seeking to eliminate the presence of spurious drugs. This initiative is supported by a new trace and track system using barcoding for high-risk medicines, which aims to enhance transparency and reduce the circulation of fake products. In addition, Indian regulatory authorities have focused on harmonizing standards with international norms through collaborations with bodies such as the World Health Organization (WHO) and the International Council for Harmonisation (ICH). (https://cdsco.gov.in, 2024) The sector has also embraced digital transformation, integrating technologies like artificial intelligence (AI), telemedicine, and e-pharmacy into healthcare. This move not only enhances patient care but also creates new opportunities for pharmaceutical companies to innovate and engage with healthcare providers more effectively. Additionally, the Indian pharmaceutical industry is making strides in the biologics and biosimilars market, focusing on producing affordable and high-quality alternatives as patents for several blockbuster drugs expire.


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As the global demand for affordable healthcare solutions grows, India’s position as a leading supplier of generic drugs remains strong, reinforced by ongoing efforts to comply with evolving global regulations. These recent encounters underscore a period of rapid transformation and adaptation, with the Indian pharmaceutical sector poised to solidify its role as a global healthcare leader through continuous innovation, regulatory alignment, and strategic investments in infrastructure and technology.

7. Dilemma Associated

The Indian pharmaceutical sector, despite its remarkable achievements and rapid growth, faces several critical challenges that could hinder its progress if not addressed promptly. These dilemmas are multifaceted, affecting the industry's supply chain, innovation potential, regulatory landscape, and profitability. The key dilemmas currently impacting the sector are detailed below:

1. Dependence on Imports for Active Pharmaceutical Ingredients (APIs)

One of the most significant dilemmas for the Indian pharmaceutical sector is its heavy dependence on imported APIs, particularly from China. Approximately 70% of India's API requirements are sourced from China, exposing the sector to risks related to geopolitical tensions, supply chain disruptions, and fluctuations in raw material costs. This over-reliance poses a threat to the industry's stability, especially during international conflicts or public health crises, as seen during the COVID-19 pandemic. Efforts to reduce this dependency through domestic production are underway, but progress has been slow, hindered by high production costs and limited infrastructure.

2. Regulatory and Compliance Challenges

The regulatory landscape for pharmaceuticals in India is complex and often fragmented, with oversight divided between central and state-level authorities. This results in delays in drug approvals, inconsistent enforcement of standards, and duplication of processes. On an international level, Indian pharmaceutical companies face scrutiny from stringent regulatory bodies like the U.S. FDA and the European Medicines Agency, where non-compliance can lead to import bans, fines, or reputational damage.

Balancing compliance with both domestic and international standards is a constant challenge, impacting the speed at which Indian companies can bring new products to market.

3. Pricing Pressures and Profit Margins

The Indian government has implemented stringent price control measures on essential medicines through mechanisms like the Drug Price Control Order (DPCO). While these controls aim to make medicines more affordable for the Indian population, they also exert considerable pressure on pharmaceutical companies’ profit margins. As a result, companies often struggle to balance affordability with the need for sustainable profits, limiting their ability to invest in R&D, innovation, and quality improvements. This dilemma is particularly challenging for smaller companies, which lack the financial flexibility to absorb pricing restrictions without compromising their operations.

4. Innovation Gap in Drug Discovery

Although India is a global leader in the production of generic medicines, it lags in original drug discovery and innovation. Most Indian pharmaceutical companies have focused on reverse-engineering patented drugs to produce cost-effective generics, leaving a significant gap in novel drug development. This lack of innovation limits the sector's ability to capture high-value segments of the pharmaceutical market, such as specialty drugs and advanced therapies. Bridging this innovation gap requires substantial investment in R&D, access to advanced technology, and stronger collaboration between academia and industry—areas where India currently falls short compared to Western counterparts.

5. Competition between Generic and Branded Medicines

The Indian market faces an ongoing tension between generic and branded medicines. While generics dominate due to their affordability, branded medicines often promise higher margins and greater profitability for pharmaceutical companies. This competition is further complicated by consumer perceptions, where branded medicines are sometimes viewed as more effective despite higher costs. The challenge for the industry is to continue promoting high-quality generics while competing with well-established international brands that dominate the premium segment of the market.


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Pandey RK et al. A Case Study on Pharmaceutical Sector: Indian Context

6. Issues of Counterfeit and Substandard Medicines

The prevalence of counterfeit and substandard medicines in the Indian market poses a significant threat to public health and the reputation of the Indian pharmaceutical industry. These spurious drugs undermine consumer trust and can result in severe health consequences, including treatment failures and adverse drug reactions. The issue is compounded by insufficient monitoring, lack of effective enforcement mechanisms, and a fragmented distribution system. Addressing this problem requires a comprehensive approach involving stricter regulations, improved traceability, and enhanced collaboration between government agencies and private sector stakeholders.

7. Impact of Global Trade Dynamics and Intellectual Property (IP) Regulations

Indian pharmaceutical companies operate in an increasingly competitive global environment, influenced by trade dynamics and intellectual property (IP) regulations. Trade policies, tariffs, and bilateral agreements can directly impact the sector’s export performance, while stricter IP protections in developed markets limit opportunities for producing generic versions of patented medicines. India’s position as a major exporter of generics makes it vulnerable to changes in international trade policies, and the industry must continually navigate complex IP landscapes to remain competitive.

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Chart No. 3: Dilemma associated with Pharma Sector
Source: Authors’ Understanding

8. Conclusion

The Indian pharmaceutical sector stands as a vital player in the global healthcare landscape, showcasing resilience, adaptability, and a commitment to affordable and accessible medicine.

As a leading producer of generic drugs and vaccines, India has earned its reputation as the “Pharmacy of the World,” contributing significantly to the healthcare needs of both developing and developed nations. However, this success comes with its share of challenges and dilemmas, ranging from dependency on imported Active Pharmaceutical Ingredients (APIs) to regulatory hurdles and a need for greater innovation in drug discovery.

Recent developments in the sector have highlighted the need for strategic shifts to address these challenges. The government’s proactive measures—such as the Production Linked Incentive (PLI) scheme and initiatives to enhance domestic API manufacturing—demonstrate a clear intention to reduce vulnerabilities and foster self-reliance. Additionally, the emphasis on digital transformation, R&D investments, and quality assurance reflects a sector that is not only focused on maintaining its generics dominance but also eager to innovate and move up the value chain. To sustain its growth trajectory, the Indian pharmaceutical sector must continue to prioritize several key areas.

Strengthening regulatory frameworks, aligning with global standards, and streamlining approval processes will be crucial for maintaining competitiveness. Similarly, investing in research and fostering partnerships between academia and industry can bridge the innovation gap, allowing India to become a hub for novel drug development and advanced therapies. Moreover, addressing pricing pressures and ensuring the quality of medicines remain pivotal in preserving the sector’s credibility and profitability.

By balancing affordability with innovation incentives, the industry can ensure a sustainable business model that meets the needs of both domestic and international markets. Looking ahead, the Indian pharmaceutical sector is well-positioned to continue its role as a global leader, provided it can adapt to emerging challenges and capitalize on new opportunities. The Indian pharmaceutical sector certainly faces dilemmas that require careful navigation. The future of the sector certainly require dedicated contributions from all stakeholders i.e., government, industry, academia, and regulators in order to transform pharmaceutical landscape into a global solution provider.


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Teaching Notes:

Objectives for the Case Instructor:

  • To equip readers / participants with the domain understanding of Pharmaceutical Sector & the strategic skills associated.
  • To gain knowledge with the respect to the dynamics of pharmaceutical business in Indian Context

Level of Analysis:

The current case is a Teaching case with Appraisal Method. The case attracts the level of BBA, MBA and Pharma Students. In general, Executive MBA candidates and largely the Pharmaceutical Sector business owners shall benefit out of the case.

Broad Questions on the Case:

Q.1: Discuss the essence of Pharmaceutical Industry in Indian Context.

Q.2: Identify the dilemma surrounding the Pharma sector and provide associated solutions?

Q.3: “Every Sector & the companies in the sector aim for prosperity and the same is essential for Organizational development”. Discuss the current status of the Pharmaceutical Sector in Indian Context

Potential Solution: (Responses to the Dilemma):

Addressing the challenges faced by the Indian pharmaceutical industry requires a comprehensive and multi-faceted strategy. Below are potential solutions aimed at mitigating the industry's core dilemmas, enhancing its global competitiveness, and securing long-term sustainability:

1. Reducing Dependency on Imports for APIs

One of the most pressing issues for the Indian pharmaceutical sector is its heavy reliance on imports for Active Pharmaceutical Ingredients (APIs), primarily from China. To mitigate this dependency, a robust domestic manufacturing ecosystem for APIs is essential. This can be achieved through Incentivizing Domestic API Production, Establishment of API Parks, Encouraging Public-Private Partnerships (PPP) etc.

2. Streamlining Regulatory Processes

The complexity and time-consuming nature of India's regulatory landscape hinder the rapid introduction of new drugs to the market. To address this issue the potential recommendation are Harmonizing Regulatory Standards, Creating a Centralized Regulatory System, Enhancing the Role of Technology etc.

3. Addressing Pricing Pressures and Profit Margins

The government’s price control measures on essential medicines aim to make healthcare affordable but have significantly squeezed profit margins for pharmaceutical companies. Solutions to this issue potentially include Balancing Price Controls with Innovation Incentives, Encouraging Value-Based Pricing, Exploring Export Opportunities etc.

4. Bridging the Innovation Gap

Although India is a leader in generic drug production, it lags in original drug discovery and innovative R&D. To bridge the gap the Sector may adopting following aspects like Promoting Research and Development (R&D) through dedicated R&D grants, funding programs, and tax incentives for companies focusing on novel drug discovery. Strengthening Collaboration between Academia and Industry and Creating Specialized Innovation Hubs etc.

5. Combatting Substandard and Counterfeit Medicines

The prevalence of counterfeit and substandard medicines undermines the credibility of the Indian pharmaceutical sector. Measures to address this issue may include measures like Implementing Advanced Track-and-Trace Systems, Strengthening Legal Frameworks, Enhancing Consumer Awareness, etc.

Case Beneficiaries:

  • The representatives of the respective Industry shall benefit from the case study.
  • The Pharma and Commerce & Management Students have strong potential of learning from the case.
  • The start-ups in the relevant industry will have good reference of the case.

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References

1. www.pharmexcil.com.

2. www.ibef.org.

3. https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?num_id=MTIwODM=.

4. https://blog.i-nexus.com/10-challenges-facing-the-pharmaceutical-industry.

5. https://www.globalpharmatek.com/blog/top-12-pharmaceutical-industry-trends-in-2024/.

6. https://efpia.eu/media/2rxdkn43/the-pharmaceutical-industry-in-figures-2024.pdf.

7. Sonwane, S. B., & Pandey, R. K. (2024). A study on review of pharmaceutical market in Indian context. Applied Science and Biotechnology Journal for Advanced Research, 3(2), 26-33.

8. Patel, P., & Pandey, R. K. (2024). A review study on insecure food habits and its impact on health & healthcare. Applied Science and Biotechnology Journal for Advanced Research, 3(3), 1-7.

9. Rajput, K., & Pandey, R. K. (2022). Pharmaceutical marketing: A literature review. International Journal of Engineering and Management Research, 12(2), 56-63.


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