I Saw the Future of Global Pharmaceutical Production in India

Guest contributor Frederic Kahn discusses the state of the Indian pharmaceutical manufacturing industry.

India has taken to calling itself the “pharmacy of the world.” That distinction came about after India’s heroic contribution to the global fight against Covid-19, when it shipped 65 million vaccines to 100 other countries and provided medical equipment and medicines to 150 countries. The pandemic highlighted India’s impressive capacity for making vaccines, generic drugs, active pharmaceutical ingredients (APIs), and other essentials — but the maturation of this industry started much earlier.

The FDA noted back in 2019 that of all the plants registered to supply the US with APIs, 18% were in India compared to 13% in China. India’s pharmaceutical industry picked up steam following China’s environmental crackdowns of 2017. And it gained even more momentum during the pandemic when India proved more resilient to supply chain disruptions than elsewhere.

All signs suggest this upward trajectory will continue. India’s government recently pledged $1.3 billion to promote domestic drug production. Meanwhile, shakeups in the global pharmaceutical supply chain are making it look less appealing to have production limited to China. It seems that India has everything it needs — supply and demand — to become a global leader in pharmaceutical manufacturing.

So I was eager to see the world’s pharmacy for myself.

I recently visited three cities in India and met with 12 of our customers there. It was a whirlwind trip of meetings, tours, facility visits, and no shortage of amazing food. It was also an eye-opening experience for someone like me who has been following the ascendance of India’s pharma sector with great interest for many years. I learned a lot, I was impressed and surprised by much of what I discovered, and I came away with some big impressions about what India means for the future of global pharmaceutical production. Here’s a few that I think will evolve in interesting and important ways in coming years.

  • Raising the Bar for Quality — India is not just an alternative to China but a superior option in many ways, especially around quality. The quality of the products themselves, the ingredients going into them, and the supply chains around them are, in many cases, better than what China has to offer and on par with anything in the US and Europe. My conversations in India confirm that quality is seen as both a priority and a competitive differentiator.
  • Adding a New Intermediary to the Ecosystem — As India consumes more of the APIs it produces for domestic drug production, it has boosted production of N-1 and N-2 intermediary products. The intermediary industry was concentrated in China before, creating a supply chain choke point. So having a new intermediary in the ecosystem should help to streamline API production for everyone.
  • Leveraging Additional Capacity — India’s pharmaceutical sector has undergone tenfold growth in the last 20 years, with the fastest expansion coming in the last five. It has added significant new capacity to the global supply of APIs and raw materials, making the global supply chain more resilient, lessening dependence on China, and promoting the growth of India’s domestic drug companies. The global dynamics of pharmaceutical manufacturing need to be reconsidered in light of what India has become.
  • Shifting Priorities in China — I doubt that China will fight to win back the API production that has (and will) move to India. More likely Beijing, given its track record, will skip a generation of product and move from API production to something more advanced: biotech, continuous manufacturing, digitalization — anything and everything innovative. China could become a leader at the cutting edge. But, in so doing, they will cede many opportunities to India. That fact that was not lost on many of the people I spoke with.
  • Global Strategic Realignment — As India continues to climb, it will become a greater strategic partner to companies in the US and Europe. But the West is also in the midst of a broad push to inshore production and reduce dependence on other countries for API requirements. It will take years and billions in investment for this strategic realignment to unfold, and the consequences will be complicated for all involved, but everyone should be prepared for a landscape that looks drastically different than it did in the past.
  • An Independent India — My biggest takeaway from my time in India is the sense of ambition and excitement that permeates everything. Everyone I met with seems to have a shared sense of optimism about what the pharmaceuticals sector in this country can become. More importantly, they have detailed, long-term plans to get there, along with ample government support. I think we will soon see India not just as a supplier to other countries but as a trailblazer in quality, R&D and overall value that rivals everywhere else in the world.

The future of pharmaceuticals has arrived early, though some might say it was overdue. For insight into what this future looks like — and how to get ahead of it — I would encourage anyone to take a closer look at what’s happening in India right now.

About the author

Frédéric Kahn is Generic APIs Commercial Head at Seqens.