US Investments Intended To Take Indian Pharma Up The Value Chain: Interview

Chennai: Indian pharmaceutical companies have committed $19.1 billion investments in the US during the SelectUSA Investment Summit 2026, at a time when India’s PLI scheme has hardly lowered dependence on China for Active Pharmaceutical Ingredients (APIs). Ravi Uday Bhaskar, former Director General of Pharmexcil, finds that the PLI scheme is being monopolised by “big firms” and the criteria have to be broad-based to include MSME manufacturers to lower imports. On the other hand, investments in the US will help Indian companies consolidate their position globally.

Can you briefly tell us about the investment commitments by Indian pharmaceutical companies in the US? Is it the first time we are seeing the sector making such large investments in the US?

This is the first time such huge investments are being made. The Indian pharmaceutical industry has grown from small companies into multinational corporations. Out of the top 20 global generic companies, six are from India. The recent acquisition of Organon by Sun Pharma for $11.75 billion and Biocon acquiring Viatris show that companies are focusing on biologics, biosimilars, high-value products, and contract drug research and development.

This is not an entirely new phenomenon. Even 10 years ago, Indian companies established facilities in the US. But at that time, their approach was conservative and focused mainly on generics and distribution.

Why are Indian pharma companies accelerating manufacturing investments in the US? India’s generic pharma industry was not placed under the tariff regime. Then why this push towards the US?

I would not call it a hurried investment. Indian companies are no longer confined to manufacturing low-cost generics. The US generic market itself is worth $115 billion, while our exports are only about $9 billion. So there is huge potential.

Once you manufacture in the US, you gain a different kind of global footing. Under the mutual recognition agreement between the US and Europe, European regulators recognise US inspections. This helps companies avoid multiple inspections and several trade barriers. The Indian pharmaceutical industry is looking at a broader global perspective.

But even now, Indian facilities get US FDA approvals to manufacture for the US and European markets. Is there any additional advantage in manufacturing directly in the US?

Yes, there is an additional advantage. If you export from India to the US, your facility requires US FDA approval. If you export to Europe, EU regulators must inspect again. But if you establish a facility in the US, you can directly supply to Europe from there.

This helps avoid trade barriers and multiple regulatory audits.

India is largely a generic drug producer. Are these investments aimed at manufacturing generics, specialty drugs, or patented drugs?

If you look at the recent transactions, companies are working on biosimilars, biologics, and specialty drugs. Generic manufacturing will not entirely shift because labour costs in the US are much higher. Manufacturing a drug in the US costs almost 30 per cent more than manufacturing it in India.

Generics are not the main focus here, though even that remains a huge market. The global generic industry is worth more than $500 billion and India exports only around $31 billion. There is still enormous potential globally, especially in emerging markets such as Latin America and CIS countries.

Unlike in the 1990s, Indian companies are not abandoning APIs and focusing only on formulations. Now they are also investing in innovation, research and development, biosimilars, high-value products, and complex generics.

Even in biosimilars and specialty drugs, India’s strength has always been cost competitiveness. Will companies retain that advantage if production shifts to the US?

These drugs are already expensive products globally. Indian companies are focusing on established firms that already operate in 130-140 countries. That gives them access to global markets and helps India move beyond the image of being only a low-cost generic manufacturer.

But that does not mean Indian companies will abandon generic formulations.

The US has seen frequent changes in trade and tariff policies. Could these investments become financially risky if another administration changes the policy direction?

That is a hypothetical question. It depends on geopolitical developments and logistics. But India has a very strong pharmaceutical industry. As long as we manufacture quality drugs at competitive prices, our products will still remain cheaper than drugs manufactured entirely in the US.

Indian companies are playing a safe game.

Will investments in the US reduce investments in Indian pharmaceutical manufacturing facilities?

The Indian pharmaceutical industry is huge. We have around 3,500 manufacturing facilities. Only a few large companies can establish facilities in the US. At the same time, India has a huge population and a growing demand for medicines. Growth will continue in both markets.

How do you view the Make in India and PLI schemes, especially for APIs where India remains dependent on China?

The PLI scheme was a good idea. Its objective was not to replace all API imports but to reduce dependence on critical APIs and key starting materials. Companies have already invested around Rs 41,000 crore before the targeted timelines.

However, even now, nearly 70 per cent of our imports come from China. China has mastered the manufacturing of APIs, chemicals, and key starting materials at scale. Manufacturing formulations is India’s strength.

The problem with the PLI scheme is that the major companies got most of the benefits. The scheme should have been extended to all companies with minimum eligibility criteria, especially MSMEs manufacturing identified APIs and intermediates.

Pricing is also important. If Chinese products are available at cheaper prices, Indian companies — even those receiving PLI incentives — will continue buying from China.

Currently, imports are above $9 billion, while export growth this financial year has been only 2 per cent. Out of our $31 billion pharma exports, imports account for over 30 per cent. We need to bring more MSMEs into the incentive network.

If more value-added pharma manufacturing shifts to the US, what happens to India’s export earnings? Will India lose its position as the pharmacy of the world?

No. India is called the pharmacy of the world because we manufacture quality drugs at affordable prices. We played a major role in supplying medicines for diseases like HIV, tuberculosis, and malaria.

There is still huge potential in emerging markets and poorer countries, where Indian generic drugs are highly relevant because of their affordability. So we are not going to lose that position.

Instead of investing abroad, shouldn’t India focus on manufacturing more specialty and patented drugs domestically to create jobs and increase exports?

Indian companies are already working on specialty drugs, biosimilars, and biologics in India as well. They want to diversify and consolidate their global presence. That is the strategy.

At the same time, Indian consumers cannot afford extremely high-cost medicines. Manufacturing in the US or Europe gives companies access to better margins in those markets.

Lastly, will India benefit from these outbound investments?

Yes. The biggest benefits are portfolio diversification and access to regulated markets. Nearly 50 per cent of our exports go to the US and Europe. Manufacturing there helps companies bypass trade barriers and reduce timelines and compliance costs.

It also gives Indian firms access to advanced research ecosystems, contract research and manufacturing opportunities, and technology transfer possibilities. These advantages are important for consolidating India’s global pharmaceutical position.

So Indian companies can continue supplying affordable medicines to poorer countries while also manufacturing complex generics and innovative drugs in regulated markets like the US.