Innovation one of the key drivers for growth in pharmaceutical sector: Economic Survey 2024

New Delhi: Finance minister Nirmala Sitharaman on Monday tabled the Economic Survey 2023-24, which highlights the next leg of growth in the Indian pharmaceutical sector by advocating for innovation while maintaining India's position as a cost-effective and efficient producer of generic drugs, aligning with the vision of Viksit Bharat.

“The R&D expenditure in India's drugs and pharmaceutical sector averaged around 5% of sales turnover in FY20 and FY21,” the survey states. “As we move towards realising the vision of Viksit Bharat, it is vital to promote innovation.”

The other key areas for the forthcoming growth trajectory of the  pharmaceutical sector, the survey emphasizes will be through skill advancement, the use of innovation and technology, and the establishment of a strong supply chain. It also underscores the importance of enhancing capabilities in biopharmaceutical manufacturing to sustain and boost exports.

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The survey further adds that the country is largely dependent on imports for “many antibiotic APIs manufactured through fermentation” which is largely due to a lack of cost-effective options in domestic API manufacturing compared to imports. “Domestic infrastructure and R&D capabilities have improved considerably in recent years, but challenges remain,” it pointed out.

The survey posits that developing new drugs targeting unaddressed health concerns will increase the breadth and quality of healthcare access for the population while yielding better returns on investments. It also propounds the fact that “the strength of the industry lies in having a diverse combination of innovators and generic producers availing drugs at a fraction of a cost.”

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However, it also accentuates that it is because of the consistent innovation in the last five to six decades that the pharma exports have seen growth. The exports of the pharma sector in FY24 stood at ₹2.19 trillion, while imports stood at a meagre ₹58,440 crore.

“The PLI schemes for bulk drugs and pharmaceuticals have helped stabilize the import of bulk drugs and improved our supply chain resilience. The CAGR of import of bulk drugs between FY22 and FY24 was 2.3%, compared to the CAGR of 5.9% in their exports. India has become a net exporter of bulk drugs,” it stated.

Accordingly, under the production linked incentive (PLI) scheme for bulk drugs, 48 projects have been approved with a committed investment of ₹3,938.6 crore.