Shaping the future of India’s pharmaceutical operations

Over the past decade and more, India’s pharmaceutical sector has become the world’s largest supplier of generic medicines, with exports growing faster than the global average. The industry is at a tipping point, however: the Indian and global landscapes are shifting. While emerging trends could disrupt the current environment, they could also lead to the next horizon of opportunities for the industry. 

Against this backdrop, what will it take for the industry to achieve its full potential and unlock the next S-curve of performance as a global leader? To answer the question, this report looks at Indian pharma’s journey so far, highlights the potential disruptions and opportunities likely ahead, and proposes strategic, thematic priorities for pharma companies as they pursue accelerated and sustained global leadership.

The evolution of India’s pharma operations

Triumphs and trials With a thrust on strong operations over the past decade, Indian pharma production has outpaced global growth by over two times, and Indian exports (at 9 per cent) have outpaced global growth (5 per cent) (1).

Five factors have contributed to this performance

1. Increased investments in infrastructure: India now has a manufacturing infrastructure of 752 Food and Drug Administration (FDA)-approved sites, 2,050 World Health Organization (WHO) Good Manufacturing Practice (GMP)- certified plants, and 286 European Directorate for the Quality of Medicines and Healthcare (EDQM)-approved plants as of 2024 (2).
2. Enhancing quality to meet global standards: Global compliance outcomes have improved over the past decade, and the industry achieved a step change in its quality excellence trajectory. 
3. Leadership in cost and operational efficiencies: Manufacturing costs in India have stayed 30 to 35 per cent lower than in the United States and Europe, because of structurally low-cost labour, collective efforts toward industry-leading cost and productivity performance, and accelerated digital adoption. 
4. Expanded capabilities across the value chain: India has also enhanced its position in the operations value chain by demonstrating broader capabilities across more complex dosages and large molecules.
5. Sustained reliability and structural resilience: The Indian pharma industry has worked toward fostering self-reliance and building strong supply-chain networks. This supported the industry to consistently and reliably maintain essential supplies in critical times such as the COVID-19 pandemic between 2020 and 2022.

Trends likely to impact the operations landscape 

The industry now stands at a crossroads, with internal and external disruptions poised to create a shifting landscape (Exhibit 1). Within the industry, performance has started plateauing while the bar for quality excellence continues to rise. Disruptions such as the next generation of digital technologies, smart automation, and new modalities or therapies could reshape traditional plant operations. 

In the external environment, an even more complex set of forces is shaping the landscape.

Geopolitical uncertainties and nearshoring could challenge current operations strategies. Sustainability in operations is fast becoming a critical business enabler for companies. New opportunities could arise and scale up, such as pharma services or contract development and manufacturing organisations (CDMOs) and emerging markets. 

Purposeful moves that build on the tailwinds and address the headwinds could help companies to remain ahead in this ever-evolving global market.

Themes for the future of Indian pharma operations 

Over the next decade, companies will need to fundamentally redefine their operational strategies. With a focus on eight core priorities, the pharma industry could build agile, efficient, reliable, and sustainable operations for the future (Exhibit 2).

1. Zero-error operations enabled by future-shaping smart quality systems: These could effect a fundamental shift from reactively resolving issues to proactively preventing defects, and from merely reducing errors to structurally eliminating them. This could unlock industry-best outcomes such as over 99.9 per cent right-first-time performance, less than 0.01 per cent batch failures and deviations, eight-sigma process capability, and zero repeat errors, among others.
2. Low-touch, sentient plant operations driving high-performance manufacturing: Intelligent systems could autonomously manage and optimise manufacturing operations to eliminate human error and enhance overall quality, over and above a potential, repeatable step-change in efficiency (such as more than 40 per cent lower manufacturing costs, consistently more than 70 per cent OEE levels, doubled productivity, and over 70 per cent reduction in plant downtimes).
3. Miniaturisation of manufacturing footprint through advanced technologies: New possibilities of continuous manufacturing, modular “plant-in-plant” setups, and small-scale operation/ microreactors for higher reliability especially in biopharma manufacturing could all contribute to modular but high-performance delivery. 
4. Customer-centric operations to support the growth of services: With purposeful shifts, emerging companies could fully unlock the CDMO opportunity, such as by broadening portfolio and capabilities, cultivating a customer-centric operations excellence model, streamlining operations for cost efficiency, attracting and retaining top operations talent, and continuing a focus on capacity expansion.
5. The next horizon of expanded enterprise-wide cost leadership: In the face of operational plateaus, companies could target the next S-curve of cost leadership through a focus on four themes: attaining the same level of cost leadership in large molecules as in small molecules, exploring deep de novo scientific optimisation for active pharmaceutical ingredient/ key starting material (API/KSM) manufacturing, attaining a last-man-standing position in their hero product, and unlocking the next wave of procurement excellence. 
6. Distributed pharma networks of the future: As part of their network strategy, companies could think about establishing centres of excellence (or CoEs) and distributing their manufacturing footprint. These COEs could help to navigate both the increasing complexity of global pipelines and emerging pockets of regionalisation. 
7. All-time autonomous planning across the supply network: “Planning by exception”, where companies will need to embed artificial intelligence/machine learning (API/KSM) or digital principles in day-to-day supply chains to unlock new levels of performance, such as more than 30 per cent lower costs on planning and inventory, service levels above 98 per cent across the network, and lead times shortened by around 25 to 40 per cent. 
8. Green network to unlock a net zero vision for operations: Organisations could start adopting an integrated dual mission approach, to drive cost optimisation across spend items while optimising their Scope 3 footprint. They could target win-win approaches to cut costs and carbon dioxide emissions, such as raw material value chain decarbonisation, process and energy efficiency, recycling and circulating, package/product redesign, and sustainable supply collaboration. 

India’s pharma industry stands strong today because of what it has built over the last decade. 

It can further accelerate its global leadership even with significant disruptions on the horizon. On the brink of a pathbreaking S-curve, it could boost growth and profitability, achieve industry-leading quality and sustainability, and drive greater innovation. The priorities outlined here could serve as a guide for pharma companies as they pursue taking this potential to reality. 

References 

1. BMI, a Fitch solutions company, 2024.
2. United States Food and Drug Administration. “Generic Drug Facilities, Sites, and Organization Lists”; Department of Science and Technology. Indian Pharmaceutical Sectorial System of Innovation (IPSSI) Report.