India pharma exports surge 9%, outpacing global average, says report

India’s pharmaceutical sector, the world’s largest supplier of generic medicines, is entering a new growth phase, with exports increasing at 9%—nearly double the global average, according to a McKinsey & Company report. The country now supplies 20% of global demand, including 40% of the US’s generic drug needs and 25% of the United Kingdom (UK) market. India has also surpassed the United States (US) in Food and Drug Administration (FDA)-registered manufacturing sites, boasting 752 FDA-approved, 2,050 WHO (World Health Organisation) Good Manufacturing Practices (GMP)-certified, and 286 European Directorate for the Quality of Medicines (EDQM)-approved plants as of 2024. Compliance has improved significantly, with US FDA Official Action Indicated (OAI) instances dropping by 50% in the last decade and European Medicines Agency (EMA) non-compliance cases falling by 27%. Additionally, India maintains a 30-35% cost advantage over the US and European manufacturers due to lower labour costs, efficiency improvements, and digital adoption. The sector has grown at an 8% Compound Annual Growth Rate (CAGR), strengthening active pharmaceutical ingredients (APIs) and biotechnology capabilities. Advanced treatments like mRNA, cell and gene therapies, and monoclonal antibodies expand at a 13-14% CAGR, outpacing conventional drugs. Artificial Intelligence (AI) and generative AI innovations could unlock Rs. 5,23,740 crore - Rs. 9,61,190 crore (US$ 60 billion - US$ 110 billion) in additional revenue, improve margins by 4-7%, and boost productivity by 50%. The top five Indian Contract Development and Manufacturing Organizations (CDMOs) have invested Rs. 56,73 crore (US$ 650 million) to expand operations, solidifying India’s role in global pharma supply chains. However, challenges such as digital transformation, automation, nearshoring trends, and sustainability demands could reshape the industry.