Driven by favorable demographics, biotech expertise and cost advantage
India has emerged as a leading player in the global life sciences supply chain in the recent past. It has a strong pharmaceutical industry, with a well-established network of manufacturers, suppliers, and distributors. India's existing Life sciences infrastructure is well positioned for an accelerated growth of the industry:
Indian Life sciences industry holds 3% of the global market share
665 FDA-approved plants outside of the US, which is the highest in the world
44% share of the global abbreviated new drug applications (ANDA)
Greater than 1400 manufacturing plants which comply with WHO requirements
World's largest supplier of generic drugs and vaccines, accounting for over 20% of the global supply
Favorable demographics:
India has the advantage of English- speaking researchers and required medical infrastructure to conduct medical research
Healthcare sector employs ~5 million Indians as of 2023, including ~1.5 million registered doctors, large reservoir of scientists and engineers
Clinical trials in India are regulated by the Central Drug Standard Control Organization, which has reduced approval time to about 30-60 days, giving opportunity for market growth
Biotech expertise:
India is among preferred destination for clinical trials owing to a large patient pool, transformation of the healthcare market, well-educated physicians and cost competitiveness
9+ biotech parks and 60+ bio-incubators: Biotechnology parks offer facilities to scientists, and small and medium sized enterprises (SMEs) for technology incubation, technology demonstration and pilot plant studies to accelerate commercial development of biotechnology
India has 665 FDA-approved plants in the US; 44% of the global abbreviated new drug applications (ANDA) and more than 1,400 manufacturing plants, which are compliant with WHO’s requirements. As of August 2022, the Department of Biotechnology has 1,582 ongoing projects
Cost advantage:
It's a volume game! Costs reduced by:
Lower labour & production costs,
High procurement of medical supplies,
High-volume by high capacity utilization,
Good human capital management (i.e. training)
Opportunities:
India currently holds the fourth position in attracting VC funding to the health-tech sector, with investments of US$ 4.4 billion between 2016 and 2021, with US$ 1.9 invested in 2021 alone
Central and State Government’s budgeted expenditure on the health sector touched 2.1% of GDP in FY23 and 2.2% in FY22 against 1.6% in FY21. The Government of India is planning to increase public health spending to 2.5% of the country's GDP by 2025
The Indian medical tourism market was valued at US$ 2.89 billion in 2020 and is expected to reach US$ 13.42 billion by 2026. According to India Tourism Statistics at a Glance 2020 report, close to 697,300 foreign tourists came for medical treatment in India in FY19. India has been ranked 10th in the Medical Tourism Index (MTI) for 2020-21 out of 46 destinations by the Medical Tourism Association
Between April 2000-June 2022, FDI inflow for the drugs and pharmaceuticals sector stood at US$ 19.90 billion, according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Inflows in sectors such as hospitals and diagnostic centres and medical and surgical appliances stood at US$ 8.09 billion and US$ 2.71 billion, respectively
India's competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism. Indian biotech companies have made massive strides with vaccine development, as Indian biotechnology industry growth is driven by vaccines and recombinant therapeutics.
In summary, there are vast opportunities for investment in healthcare infrastructure in both urban and rural India. Outsourcing healthcare supply chain to India can help healthcare companies reduce costs, improve supply chain processes, access skilled talent, and tap into a growing market.
About the Author:
Lavanya Raja, Chief Economist & Co-Chair GIO Business Chamber.
In her writing, she explores the Indian economy and its potential for the Indian diaspora worldwide, providing in-depth analyses of specific sectors supported by data to facilitate informed decision-making.