The catalyst for change came in 1970 with the overhaul of India's legally accepted British Patent Act of 1911. In contrast with the United Kingdom's own amendment to this act in 1949, India continued to operate in a manner that restricted the production of major drugs under patent protection for twenty years. After the ratification of the Indian Patent Act in 1970, the golden age of India's domestic pharmaceutical industry began. The industry's sales increased from a few hundred million dollars in the early 1970s to almost $8 billion by mid 2006. Exports today reach $5 billion, and MNCs' market share of the overall production has dropped below 30%. Overall, the Indian pharmaceutical industry now represents nearly 1.5% of India's gross domestic product (GDP), and reported growth is slightly more than 10%. Analysts estimate India's pharmaceutical industry will grow at a compounded annual growth rate (CAGR) of 13.6%, making revenue figures of more than $10 billion by 2010 a realistic projection.
India's population of nearly 1.2 billion includes the third-largest English-speaking technical and scientific labor pool in the world. For this reason, India has the jump on most countries in terms of human capital. Employing more than 30 million people, India's pharmaceutical industry has approximately 3000 active pharmaceutical ingredient-manufacturing facilities, nearly 5000 formulation facilities, and 2000 other pharmaceutical facilities. Out of these, 300 facilities are in the medium to large range. Some subsectors, including biotechnology, bioinformatics, contract research and manufacturing services, clinical research organizations, and pharmaceutical machinery manufacturing, are growing in tandem with the larger pharmaceutical industry, as experienced human resources and investments spill over into these areas as well. It is therefore no wonder that India is increasingly being called the "Gateway to Pharma".
The grass is always greener on the other side, however. Growing complaints from pharmaceutical producers about India's lack of infrastructure, government-regulated price control of drugs, and resurfacing patent concerns are some of the issues at stake. Despite the consistent double-digit growth of the last five years, India's pharmaceutical industry faces some problems. Stringent international intellectual-property protections, good manufacturing practice measures, several successive acquisitions, and cutthroat competition in the domestic generic drugs arena have slashed profit margins and greatly reduced research and development budgets that are essential in moving up the value chain.