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India is the largest supplier of medicine to US, and pharmaceutical exports from India raise from $3.44 bn in 2013 to $3.76 bn in 2014. Country's pharma sector is likely to grow over three-fold to hit $55 billion in the next five years, even as the exports from the sector may slow down to grow at a CAGR of 7.98% owing to stricter regulations in markets such as the US, Russia and Africa, says a report.

"Indian pharmaceutical industry is expected to touch $55 billion by 2020 as against the current size of $18 billion but the exports may slow down to grow at a CAGR of 7.98% in value terms due to tightening of regulatory mechanism in top exports markets of US, Russia and Africa," a joint report by Assocham and TechSci Research reveals.

With 70 percent of market share (in terms of revenues), generic drugs form the largest segment of the Indian pharmaceutical sector, Consolidation of pharmacy players is leading to an increase in pricing pressures for generic companies existing in the US market, which is expected to result in a decline in the year-on-year growth of pharmaceutical exports from India over the next five years.

India is the largest supplier of medicine to the US and pharmaceutical exports with a year-on-year growth of 11.44 per cent to US$ 12.91 billion in FY 2015-16, according to data from the Ministry of Commerce and Industry. In addition, Indian pharmaceutical exports are poised to grow between 8-10 per cent in FY 2016-17.

Pharmaceutical exports to the US are rising due to the increasing demand for high quality generic drugs in the market. However, the growth rate for exports of pharmaceutical products from India to the US is declining, due to increasing US Food and Drug Administration (FDA) scrutiny on the quality of pharma products coming from drug manufacturing plants located in India.

The Union Cabinet has given its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to certain conditions.

In addition, many Indian companies are operating through the Pharmaceutical Benefits Program (PBP) and hospital tenders, for supplying vital and essential drugs, for which prices are then regulated by the Russian government, it said.

Government Initiatives:

The Government of India unveiled Pharma Vision 2020 aimed at making India a global leader in end-to-end drug manufacture. Approval time for new facilities has been reduced to boost investments. Further, the government introduced mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to deal with the issue of affordability and availability of medicines.

Mr Ananth Kumar, Union Minister of Chemicals and Petrochemicals, has announced setting up of chemical hubs across the country, early environment clearances in existing clusters, adequate infrastructure, and establishment of a Central Institute of Chemical Engineering and Technology.

The Department of Pharmaceuticals has planned to launch a venture capital fund of Rs 1,000 crore (US$ 149.11 million) to support start-ups in the research and development in the pharmaceutical and biotech industry.

The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.