NITI Aayog Calls For A Shift To High-Value Drugs For Indian Pharma Companies, Here is Why

India’s pharmaceutical sector, long regarded as the “pharmacy of the world,” is now being urged to evolve into a high-value, innovation-driven industry. NITI Aayog, in its latest Trade Watch Quarterly report, has called for a strategic shift towards high-value drugs and advanced biopharmaceuticals to strengthen India’s global competitiveness and reduce structural vulnerabilities.

The recommendation comes at a time when India remains a dominant player in generic medicines but continues to rely heavily on imported inputs and faces gaps in innovation ecosystems.

Strong Global Position in Generics, But Limited Value Addition

India currently holds a significant share in global affordable medicine supply chains. It meets around 50% of Africa’s generic drug demand, 40% of the United States’ requirement, and nearly 25% of the United Kingdom’s generic pharmaceutical needs.

Despite this strong export base, NITI Aayog highlighted that India’s growth has largely been volume-driven rather than value-driven. The sector continues to depend on low-margin generics, limiting its ability to capture higher value in global pharmaceutical markets.

Heavy Dependence on China Raises Strategic Concerns

One of the key concerns flagged in the report is India’s reliance on China for critical pharmaceutical inputs. Around 65% of active pharmaceutical ingredients (APIs) and key starting materials are imported from China, exposing the sector to supply chain risks.

NITI Aayog noted that this dependence could hinder long-term resilience, especially in a global environment marked by supply disruptions and shifting trade dynamics.

Push For Innovation, FTAs And Better Ecosystems

To address these challenges, NITI Aayog has proposed a dedicated pharmaceutical chapter in future free trade agreements (FTAs) to ensure regulatory predictability and smoother global trade integration.

The report also calls for stronger collaboration between industry and academia in life sciences clusters to boost research, patent commercialisation, and startup growth in the biotech and pharma space. Additionally, it suggests shifting environmental compliance responsibilities from individual firms to shared infrastructure to reduce cost pressures on manufacturers.

Read more: IRFC Share Price Falls Nearly 5% As Government Launches OFS At 7.5% Discount.

Conclusion

NITI Aayog’s recommendations highlight a clear turning point for Indian pharma. While the industry remains a global leader in affordable generics, its next phase of growth will depend on innovation, higher-value drug development, and reduced import dependency. Moving up the value chain could redefine India’s position from a scale-driven manufacturer to a global hub for pharmaceutical innovation.

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