Why India is knowns as the pharmacy of the developing world?

Made in India tag in a medicine often reminds you two things-high quality and low price. Ability to quickly master production of niche medicines, competitive domestic firms, strong R&D back up and Active Pharmaceutical Ingredient supply makes the pharmaceutical industry of the country very competitive. In the pharmaceutical world, India is often considered as the Robinhood. Medicins sans Frontiers once described India as the ‘pharmacy for the developing world’. The low price tag along with high quality makes Indian drugs favorite among the developing countries at the same time ensuring health security in several poor countries.

India is one of the largest producers of pharmaceuticals as it being the third largest in production volume (10 per cent share) and fourteenth by value (1.4 per cent share) worldwide. India has the largest number of United States Food and Drug Administration (USFDA) recognized plants outside the US. Around 584 Indian companies/sites are registered with the USFDA. There are around 10000 registered pharmaceutical companies in India.

India exports to over 200 countries and it is one of the top ten pharmaceutical exporters. Pharmaceutical exports clocked US$ 15.5 billion during 2014–15. The US is the largest importer of Indian products.

India is a major exporter of cheap drugs

The strong area of the Indian pharmaceutical industry is that they are the leading producers of generic drugs. Indian pharmaceutical medicines contribute to nearly 5 percent of the total world’s consumption of generic drug medicines in the at present. Nearly half of the Indian pharma output is exported. Consumers in the developed world also have shown attachment to the generics given their cost advantages. Similarly, Indian firms have established their presence in many overseas markets.

The factor that propelled the emergence of the vibrant pharmaceutical industry was the 1970 Patent Act. It has allowed process patent in important sectors like drugs and chemicals. During that time the country was meeting nearly 80 percent of its drug needs through imports. But when the country has migrated to the product patent regime in 2005, domestic suppliers provided nearly 80 per cent of the national market.

Indian firm’s competitiveness is basically rooted in the process patent regime provided by the 1970 Act. Reverse engineering practice invented by the firms enabled them to cut cost as well as to enhance efficiency. When the product patent regime was introduced with the patent amendment in 2005, the pharmaceutical industry acquired a brand image of producers of low priced and quality drugs. In the new environment, the Indian firms have started to compete as well as collaborate with the global players. They have adapted with the new environment in three different ways by engaging in strategic alliances with other global players, by providing R&D outsourcing services, and by engaging in contractual manufacturing including the supply of Active Pharmaceutical Ingredients.