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Pharma Sector Looks to Upcoming Union Budget for Growth and Innovation

With the Indian pharmaceutical sector aiming for a market value of USD 120 billion by 2030, industry leaders are urging the government to introduce measures that enhance quality, innovation, and investment.

• By PharmaNews Live Desk
• New Delhi
• Jul 16, 2024

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As Finance Minister Nirmala Sitharaman prepares to present the Union Budget for the fiscal year 2024-25 on July 23 in the Lok Sabha, the healthcare and pharmaceutical industries are advocating for policies that will drive growth, foster innovation, and improve accessibility. 

With the Indian pharmaceutical sector aiming for a market value of USD 120 billion by 2030, industry leaders are urging the government to introduce measures that enhance quality, innovation, and investment. 

Advocacy for Tax Incentives and Financial Assistance

The Indian pharmaceutical market is projected to hit $130 billion by the end of the decade. Industry executives are calling for tax incentives and financial support for research into new drugs. As Prime Minister Narendra Modi prepares to deliver his first major budget announcement of his third term, the pharmaceutical sector is stressing the need for a domestic market that can support the profitability of innovative drugs. 

An open letter to the Prime Minister from research firm Bernstein underscored the need for insurance coverage for new drugs and the standardization of regulatory processes for manufacturing and clinical trials. 

Support for Novel Drug Manufacturing

Since 2020, India has provided incentives to boost the manufacturing of various products, including pharmaceuticals. However, those incentives have yet to benefit manufacturers of novel drugs. 

The Pharmaceutical Export Promotion Council of India (Pharmexcil) forecasts that export sales, especially in the US generics market, will rise to $55 billion by 2030. To meet the target of expanding India's pharmaceutical sector to $120-$130 billion by 2030 and capturing 7% of the global market share, the industry is requesting additional government support to enhance R&D investments. 

Advocates for a Nurturing Ecosystem

Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance, emphasized the need for a conducive environment and supportive policies. He stressed the importance of policies that promote investment in R&D, improve quality standards for better market access, and encourage self-sufficiency. "Such policies will strengthen India's position as the leading producer by volume and among the top three by market value by 2047," Jain stated. 

Currently valued at $50 billion, India's pharmaceutical industry accounts for 3.6% of the global market by value. Statista projects that domestic pharmaceutical revenue will rise from $13.16 billion in 2024 to $16.56 billion by 2029, growing at a compound annual growth rate (CAGR) of 4.70%. 

Growth Prospects

India is the world's largest producer of generic drugs, supplying 20% of global generics and about 60% of the world's vaccine needs. The sector contributes approximately 2% to India’s GDP and provides jobs for around 3.5 million people. 

The Organisation of Pharmaceutical Producers of India (OPPI) is hopeful that continued policy reforms will support innovation and streamline regulatory processes. OPPI also highlights the need for an effective intellectual property rights regime to foster growth and encourage research-based pharmaceutical companies to introduce new therapies in India. 

Pre-Budget Expectations and Government Initiatives

As the Union Budget 2024 approaches, the pharmaceutical sector is eagerly anticipating potential benefits. Recent government initiatives have aimed to enhance India's self-sufficiency in active pharmaceutical ingredients (API) and key starting materials (KSM) through production-linked incentive schemes (PLI 1.0 & PLI 2.0). The updated Schedule M under the Drugs and Cosmetics Act, 1940, is designed to improve pharmaceutical manufacturing quality practices. 

Additionally, the Promotion of Research and Innovation in Pharma MedTech Sector (PRIP) scheme seeks to stimulate R&D within the sector. The Department of Pharmaceuticals (DoP) is positive to drive innovation and transformation in the med-tech sector through PRIP. Industry leaders believe that to attract investment and build a resilient, future-ready pharmaceutical industry, the government should also offer incentives for investments in pharmaceutical company bonds. 

Healthcare Infrastructure and Budget Requests

During a meeting with Finance Minister Nirmala Sitharaman, the PHD Chamber of Commerce and Industry (PHDCCI) presented its Pre-Budget Memorandum for the 2024-25 Union Budget. 

Dr. Deep Goel, Chair of the Health Committee at PHDCCI, highlighted the need to improve India's health infrastructure, increase government spending on public health, and address gaps in affordable healthcare access. 

The PHDCCI memorandum recommended strategic resource allocation to expand healthcare facilities, incentivize healthcare professionals, and establish well-equipped primary healthcare centers and government hospitals, particularly at the Tehsil/Block level. 

As the Union Budget 2024 approaches, the pharmaceutical industry is keenly watching for policy measures that could shape its future trajectory. With a clear focus on enhancing innovation, supporting novel drug manufacturing, and improving healthcare infrastructure, the upcoming budget could be pivotal in achieving the sector’s ambitious growth targets. 

The industry’s collective hope is that the government's financial and policy support will drive significant advancements, ensuring that India not only meets its market goals but also strengthens its global pharmaceutical position as the ‘pharmacy of the world’.