India’s drugs industry: how one country took over the global medicine market

India is known as the “pharmacy of the world” for good reason. The country supplies about 20% of all generic drugs – cheaper versions of brand-name medicines, widely prescribed around the world.

As such, India’s pharma industry is never far from the headlines. But the coverage is mixed – while some stories tout the sector’s meteoric growth, others tell of harm done around the world by dangerous Indian-made drugs.

The industry is also growing: one estimate suggests that country’s pharma export market will increase at least tenfold by 2047, bringing its value to $350bn. So the pressure is on to ensure that the medicines coming out of India are not only safe but effective – and to reassure the world of the same.

The industry was shielded from a serious setback when Donald Trump exempted pharmaceutical products from the tariffs he announced earlier this month. However, he later said that tariffs targeting the sector were on the way.

While Indian drug companies are hopeful they can remain competitive, higher tariffs could make some drugs financially unsustainable and could lead to shortages in the US and beyond.

When did it all begin?

As early as the 18th century, locally made drugs rooted in traditional remedies were widely used across India. But over time, the domestic industry began to face stiff competition from imported drugs. These tended to be preferred by the Bengali middle classes and were further supported by central government, both before and after independence in 1947.

A milestone moment came in 1970, when the Patents Act changed the exclusive rights that could be granted to the inventor of a drug, limiting them to manufacturing processes only (and not final products). This meant that Indian companies could now reverse-engineer branded drugs and develop affordable alternatives, known as generics.

India’s then-prime minister Indira Gandhi, who said western pharma companies had been exploiting patent laws to keep drug prices high, was a big advocate for this reform. She saw the Patents Act as a tool to break foreign monopolies, boost local production and secure patients’ access to affordable medicines.

She was right. Production and exports skyrocketed, and Indian pharma companies soon thrived. Even when patent laws were tightened in 2005, the country managed to stay competitive by focusing on making and exporting drugs whose patents had expired. Key to this success were India’s cost-effective labour and manufacturing processes.

What is India’s generics industry known for?

Primarily, its global exports. In the US, for instance, where nine out of ten prescriptions dispensed are for generics, India provides around 40% of those generic drugs. In the UK, it supplies around 33% of generics, which account for four out of five NHS prescriptions. India is also a key source of pharma products for sub-Saharan Africa, where people often depend more heavily on affordable medicines

Historically, India’s generics industry first gained global attention in the early 2000s, when the Mumbai-based producer Cipla revolutionised access to HIV medications. Cipla’s chairman said he was driven by concern about the HIV/Aids epidemic in Africa to reduce the cost of vital drugs known as antiretrovirals.

With no patent protection in place in India at the time, Cipla managed to create a drug combination that could be priced far lower than the patented versions sold by pharma companies.

The move helped to reduce the annual cost per patient of HIV/Aids treatment in Africa from about $15,000 in the 1990s to approximately $200 in 2005.

Are Indian-made drugs safe?

There are longstanding concerns about the quality and safety of generics made in India, partly because the country’s regulation standards are not necessarily in line with those of other nations. In 2014, India’s chief drug regulator said that adhering to US standards would mean shutting down most drug manufacturing facilities in the country.

Companies are also not required to follow international inspection standards – India has so far not joined a global scheme designed to harmonise pharma inspections. And even when inspections do happen, some companies have been caught destroying manufacturing records.

India’s state-run labs, which are responsible for testing a drug’s quality before any medicine reaches patients, are often underfunded, short-staffed and lacking the right equipment. The country is also low on local inspectors for drug testing and factory visits. The national drug regulator has only 2,000 officials to oversee more than 10,000 factories and a million pharmacies.

Lax oversight can allow unscrupulous companies to cut corners, especially under the pressure of government-imposed price caps on essential drugs. This can lead to lower-quality drugs, including those with the wrong amount of active ingredient or those containing contaminants.

Have Indian drugs been linked to scandals?

Regulating India’s generic drugs is a global concern as weak oversight can have life-or-death consequences.

Poorly made Indian cough syrup has led to the deaths of more than 100 children in countries including Uzbekistan, Cameroon, Gambia and India since 2019. Contaminated eye drops killed and blinded patients in the US in 2023.

Inappropriate exports are also dangerous. In February, the Bureau of Investigative Journalism revealed how ineffective antivenoms made in India were being sold in sub-Saharan Africa. A report that same month revealed how an Indian pharmaceutical company was found to have illegally exported unlicensed opioids to west Africa.

What can be done to improve the quality of Indian drugs?

Since 2023, India’s government has been rolling out stricter quality regulations for pharmaceutical manufacturers, requiring them to upgrade their facilities to meet higher standards.

The industry has been slow to respond, despite compliance deadlines getting pushed back. The government also is investing in projects to centralise data on manufacturers and supply chains; the aim is to make monitoring more efficient and streamline licensing and export approvals.

Stronger collaboration with global regulators could also help India meet international standards. A first step could be its participation in bodies that work to standardise drug regulation and inspections, something that has been encouraged by the US’s Food and Drug Administration.

Indian pharma companies can also look beyond generics to attract foreign investment. Industry experts have called on the government to offer greater incentives for companies to produce advanced medicines, like biologics. A shift away from cheap generics would likely increase the value of India’s exports and generate more revenue for the industry, which could be invested in better facilities and quality controls.

How might Trump’s tariffs affect India’s generic drugs industry?

India and the US rely heavily on each other when it comes to pharmaceuticals. India’s access to the US market allows its generics industry to stay profitable, while the US can’t make enough generics to cover its own demand.

India and China are also important sources of raw ingredients for medicines. Together, the countries provide over 70% of the active ingredients used in US domestic drug production. The US has previously worked with India to try to reduce its reliance on China for pharmaceuticals and drug ingredients. However, Donald Trump’s trade decisions may shake things up. The president has called India a “tariff king” for imposing high levies on US goods and earlier this month he imposed reciprocal tariffs on most Indian imports (though later paused them).

The two countries may, however, agree new trade terms to mitigate the shared impact. At present India’s pharma industry is subject only to the new 10% baseline duty on all US imports, which market experts believe will not add significant pressures on India’s manufacturers. However, Trump appears to be planning additional tariffs on all pharmaceutical imports.

This could severely limit drug availability, particularly for generics. The American Hospital Association has warned that higher costs and supply chain delays could lead to shortages of antibiotics, cancer therapies and cardiovascular drugs.

Even if Trump decides against further tariffs, his stance on China could still damage India’s ability to meet the global generics demand. India imports 70% of the active ingredients needed to make its drugs, mostly from China. Pharmaceutical companies there are facing harsher US tariffs that could send some manufacturers out of business, hurting Indian companies further up the supply chain.

Others believe India could benefit from the US-China tensions but it is unclear how the new financial pressures will impact Indian manufacturers already struggling to stay profitable. Higher costs may be passed on to consumers – or compromise drug quality.