As India steps into 2026, the Indian pharmaceutical industry stands on a solid footing, marked by resilience, strategic clarity, and sustained momentum. The sector has continued to demonstrate its strength as a reliable and competitive partner in global healthcare, reinforcing confidence across domestic and international markets.
Looking ahead to 2026, Indian pharma is well-positioned to sustain 7–9% growth, driven by robust domestic demand, stable export performance, and a steady transition towards complex generics, biosimilars, and specialty products.
More importantly, 2025 marked a structural reset in the industry’s growth narrative. While cost competitiveness and leadership in generics remain foundational strengths, the sector is increasingly being shaped by quality upgradation, innovation-led value creation, and closer alignment with global regulatory standards. This transition is laying the groundwork for a more durable and differentiated growth path as Indian pharma enters the next phase of its evolution.
At the same time, emerging areas such as cell and gene therapies, peptides and precision medicine are opening new growth frontiers. Realising this potential will require continued investments in specialised skills, deeper industry–academia collaboration, stronger translational research frameworks, and targeted skilling initiatives.
Policy Push for Value Creation
A key enabler of this reset in 2025 has been a strong policy-led push to enhance competitiveness and affordability. The rollout of GST 2.0 stands out as a pivotal policy milestone, simplifying tax structures, enabling seamless input credits and reducing inefficiencies across the value chain. Affordability has been complemented by a sharper focus on quality. The rollout of the revised Schedule M guidelines marks a significant step towards harmonisation with international GMP standards, strengthening quality compliance across both large manufacturers and the MSME segment. Planning a roadmap for ICH/PICs accession will further enhance the global acceptability of Indian pharmaceutical products.
The High-Level Committee on regulatory reforms also made important strides during the year, emphasising faster and more predictable approvals, digitalisation of regulatory processes, and an improved ease of doing business for pharma and biotech companies. Collectively, these initiatives are supporting India’s transition from being the “pharmacy of the world” to an innovation-led pharmaceutical powerhouse.
Innovation gathers traction
India’s innovation engine gained visible momentum in 2025. Strong interest in the PRIP scheme signals a meaningful start towards building a sustainable R&D pipeline. Recent developments, including global licensing deals, strategic acquisitions and regulatory approvals for Indian-origin therapies, reflect rising confidence in homegrown innovation and scientific capability.
However, a structural challenge remains. Indian pharmaceutical companies continue to invest 7–8% of revenues in R&D, significantly lower than the 15–25% typically invested by global innovators. Without sustained access to long-term risk capital, India risks remaining strong in process innovation while lagging in discovery-led innovation.
Global Headwinds and Domestic Challenges Shaping Indian Pharma
Even as growth persists, the industry continues to operate in an increasingly complex global environment.
Geopolitical pressures, from US–China trade rivalries to regional conflicts, are reshaping global supply chains, driving countries toward onshoring and de-risking. For India, this brings both opportunity and risk. Dependence on a single-source API and KSM supplies has been a major vulnerability. The PLI scheme, launched five years ago, is now showing results, such as the production of Penicillin-G in India, and strengthening supply chain resilience.
At the same time, trade nationalism is rising. Higher tariffs, stricter import rules and non-tariff barriers are increasing uncertainty for export-oriented companies. Regulators in key markets such as the US and EU are also tightening scrutiny around quality, data integrity and cybersecurity, raising compliance costs and lengthening approval timelines.
Additionally, pricing pressures and buyer consolidation in key export markets continue to compress margins in the generics segment. Yet, as supply chains diversify and demand grows for reliable, compliant partners, Indian manufacturers that invest in quality, compliance and innovation upgrades are well placed to capture a larger share of global markets.
The Way Forward
Despite these challenges, the resilience of India’s pharma sector remains evident. Domestic growth continues at 8–9%, while exports are expected to reach a record $32 billion, driven by growing demand in Europe, Africa and Latin America. Even amid uncertainty and tighter global quality norms, steady demand and improving supply chains continue to reinforce momentum. The next five years will be crucial. Focused action and sustained reforms can help India achieve its $450–500 billion life sciences ambition. Key priorities include scaling up R&D investment through expanded PRIP support and mission-mode innovation funding; modernising regulation through globally harmonised, digitally enabled pathways; deepening global integration via mutual recognition and regulatory harmonisation; and exploring underpenetrated markets while consolidating established export destinations.
Indian pharma stands at a defining inflection point. The reforms of 2025 and early innovation momentum offer a strong foundation, but global leadership will require sustained investment, decisive policy execution, and an unwavering commitment to quality and science. If India can unite innovation, affordability, and world-class quality at scale, it can evolve from the world’s largest supplier of generics to a leading source of new therapies and biotech breakthroughs. What India builds now will define its place in the future of global healthcare.
