Over the past decade and more, India’s pharmaceutical sector has become the world’s largest supplier of generic medicines, with exports growing faster than the global average. The industry is at a tipping point, however: the Indian and global landscapes are shifting. While emerging trends could disrupt the current environment, they could also lead to the next horizon of opportunities for the industry.
Against this backdrop, what will it take for the industry to achieve its full potential and unlock the next S-curve of performance as a global leader? To answer the question, this report looks at Indian pharma’s journey so far, highlights the potential disruptions and opportunities likely ahead, and proposes strategic, thematic priorities for pharma companies as they pursue accelerated and sustained global leadership.
The evolution of India’s pharmaceutical operations: Triumphs and trials
With emphasis on strong operations over the past decade, Indian pharma production has outpaced global growth by over two times, and Indian exports (at 9 percent) have outpaced global growth (5 percent).1 Five factors have contributed to this performance:
- Increased investments in infrastructure. India has a manufacturing infrastructure of 752 Food and Drug Administration (FDA)–approved sites, 2,050 World Health Organization (WHO) Good Manufacturing Practice (GMP)–certified plants, and 286 European Directorate for the Quality of Medicines and Healthcare (EDQM)–approved plants as of 2024.2
- Enhancing quality to meet global standards. Global compliance outcomes have improved over the past decade, and the industry achieved a step change in its quality excellence trajectory.
- Leadership in cost and operational efficiencies. Manufacturing costs in India have stayed 30 to 35 percent lower than in the United States and Europe, because of structurally low-cost labor, collective efforts to achieve industry-leading cost and productivity performance, and accelerated digital adoption.
- Expanded capabilities across the value chain. India has also enhanced its position in the operations value chain by demonstrating broader capabilities across more complex dosages and large molecules.
- Sustained reliability and structural resilience. The Indian pharma industry has worked at fostering self-reliance and building strong supply-chain networks. This supported the industry to consistently and reliably maintain essential supplies in critical times such as the COVID-19 pandemic between 2020 and 2022.
Trends likely to have impact on the operations landscape
The industry now stands at a crossroads, with internal and external disruptions poised to create a shifting landscape (Exhibit 1). Within the industry, performance has started plateauing while the bar for quality excellence continues to rise. Disruptions such as the next generation of digital technologies, smart automation, and new modalities or therapies could reshape traditional plant operations.
In the external environment, an even more complex set of forces is shaping the landscape. Geopolitical uncertainties and nearshoring could challenge current operations strategies. Sustainability in operations is fast becoming a critical business enabler for companies. New opportunities could arise and scale up, such as pharma services or contract development and manufacturing organizations (CDMOs) and emerging markets.
Purposeful moves that build on the tailwinds and address the headwinds could help companies to remain ahead in this ever-evolving global market.
Themes for the future of Indian pharmaceutical operations
Over the next decade, companies will need to fundamentally redefine their operational strategies. With a focus on eight core priorities, the pharma industry could build agile, efficient, reliable, and sustainable operations for the future (Exhibit 2).
- Zero-error operations enabled by future-shaping smart quality systems. These could effect a fundamental shift from reactively resolving issues to proactively preventing defects and from merely reducing errors to structurally eliminating them. This could unlock industry-best outcomes such as over 99.9 percent right-first-time performance, less than 0.01 percent batch failures and deviations, eight-sigma process capability, and zero repeat errors, among others.
- Low-touch, sentient plant operations driving high-performance manufacturing. Intelligent systems could autonomously manage and optimize manufacturing operations to eliminate human error and enhance overall quality, over and above a potential, repeatable step change in efficiency (such as manufacturing cost reductions of more than 40 percent, overall equipment effectiveness [OEE] consistently exceeding 70 percent, a doubling of productivity, and plant downtimes reduced by 70 percent).
- Miniaturization of manufacturing footprint through advanced technologies. New possibilities of continuous manufacturing, modular “plant-in-plant” setups, and small-scale operations or microreactors for higher reliability, especially in biopharma manufacturing, could all contribute to modular but high-performance delivery.
- Customer-centric operations to support the growth of services. With purposeful shifts, emerging companies could fully unlock the CDMO opportunity, such as by broadening portfolio and capabilities, cultivating a customer-centric operations excellence model, streamlining operations for cost efficiency, attracting and retaining top operations talent, and continuing a focus on capacity expansion.
- The next horizon of expanded enterprise-wide cost leadership. In the face of operational plateaus, companies could target the next S-curve of cost leadership through a focus on four themes: attaining the same level of cost leadership in large molecules as in small molecules, exploring deep de novo scientific optimization for API/KSM (active pharmaceutical ingredient/key starting material) manufacturing, attaining a last-person-standing position in their hero product, and unlocking the next wave of procurement excellence.
- Distributed pharma networks of the future. As part of their network strategy, companies could think about establishing centers of excellence (COEs) and distributing their manufacturing footprint. These COEs could help to navigate both the increasing complexity of global pipelines and emerging pockets of regionalization.
- All-time autonomous planning across the supply network. Planning by exception, where companies will need to embed AI/ML (artificial intelligence/machine learning) or digital principles in day-to-day supply chains to unlock new levels of performance, such as planning and inventory cost reductions of more than 30 percent, service levels above 98 percent across the network, and lead times shortened by around 25 to 40 percent.
- Green network to unlock a net-zero vision for operations. Organizations could start adopting an integrated dual-mission approach, to drive cost optimization across spend items while optimizing their Scope 3 footprint. They could target win–win approaches to cut costs and carbon dioxide emissions, such as raw-material value chain decarbonization, process and energy efficiency, recycling and circulating, package/product redesign, and sustainable supply collaboration.
India’s pharmaceutical industry stands strong today because of what it has built over the last decade. It can further accelerate its global leadership even with significant disruptions on the horizon. On the brink of a pathbreaking S-curve, it could boost growth and profitability, achieve industry-leading quality and sustainability, and drive greater innovation. The priorities outlined here could serve as a guide for pharmaceutical companies as they pursue taking this potential to reality.
