Indian Pharma Leads Global Generic Medicine Supply, says McKinsey Report

The latest report released by McKinsey & Company in Mumbai states that the soaring growth of exports exceeds that of the global average- positioning the Indian pharmaceutical sector as the world's largest supplier of generic medicines. The report was launched at Mumbai's 10th Global Pharmaceutical Quality Summit recently and shows evolving trends within Indian and global markets may lead to industry disruptions while development opportunities come into focus.

According to the report findings, the massive investment in world-class infrastructure has seen India surpass the U.S. in FDA-registered generic manufacturing sites, showing a 2.6% compound annual growth rate (CAGR). There are 752 FDA-approved, 2,050 WHO GMP-certified, and 286 EDQM-approved drug manufacturing sites in India as of 2024.

Also improved are compliance outcomes, including a 50% reduction in official action indicated (OAI) cases following U.S. FDA inspections between 2013-14 and 2023-24 and a drop in EMAs (European Medicines Agency) noncompliance by 27%. However, because of cheaper human capital, industry-wide cost optimization, and the rapid adoption of digital technologies, India's manufacturing costs are still 30 to 35% lower than those in the U.S. and Europe.

The Indian pharmaceutical market experienced a prolonged spell when growth in the current year is expected to be about 9% in 2024. This is twice the global average, with 20% of global demand catered for by it; this includes over 40% of the U.S. generic market and 25% of the U.K.'s pharmaceutical needs. Performance has slowed, and quality excellence expectations have emerged, meaning the industry is troubled.

Emerging technologies such as smart automation and advanced digital platforms would revolutionize plant operations. Apart from that, the external pressures from the increasingly complex set of global regulations and market dynamics are raising the stakes for transformation. If Indian pharmaceutical companies hope to succeed, they will need to future-proof their operations through the adoption of advanced technologies, upgrade workforce competency, and improve efficiencies and sustainability.

"India’s pharmaceutical industry stands strong today because of what it has built over the last decade, with disruptions on the horizon, it is crucial for the industry to embrace these strategic themes and fundamentally transform operating model to unlock a high-performance future", said Vishnukaant Pitty, Partner, McKinsey & Company.

When explicitly put into practice, these strategies could change the mode of self-sustainability and greater leadership in the world while opening new avenues for growth in the coming years.