Budget 2025: Pharma industry lays out a plan to curb Chinese dependence

India’s pharmaceutical industry is booming, recognised as the world’s third-largest by volume and 14th by value of production. With exports to over 200 countries, covering 50% of Africa and 40% of the generic demand in the US, and supplying 25% of the UK’s medicine requirements, the industry is poised for significant growth, projected to reach $120-130 billion by 2030 and $450 billion by 2047.

To achieve this ambitious target, experts emphasise the need for the Union Budget 2025-2026 to prioritise research and development (R&D) and ease the regulatory framework. Currently, the Indian pharma industry allocates about 8.4% of its total sales value towards R&D, lower than the global average of 10-11%. To bridge this gap, Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), suggests that the budget should allocate at least 10% of the National Research Fund to life sciences.

Anil Matai, Director General of the Organisation of Pharmaceutical Producers of India (OPPI), stresses that targeted investments are urgently needed to ensure the competitiveness of new chemical entities. Simplifying the process of obtaining regulatory approvals will also enhance the sector’s competitiveness.

The industry stakeholders also call for increasing healthcare expenditure. For context, the government has set a target to increase healthcare expenditure to 2.5% of the country’s gross domestic product (GDP) by 2025, according to India’s National Health Policy (2017). “The actual expenditure has been around 1.7% to 1.8% of GDP between 2022 and 2024, which is still below the target. The government should accordingly focus on how to achieve this spend in 2025,” adds Matai.

“Simplifying compliance through a single-window reporting mechanism would streamline operations for manufacturers, further enhancing ease of doing business. Investment in pharma parks with centralized utilities like power, water, steam, and ETP services can substantially reduce project costs, as these account for up to 60% of setup investments. Tax reforms, including lower corporate income tax rates, would make Indian manufacturers more competitive globally and encourage further investments,” says Mridul Dhanuka, Director, Orchid Pharma.

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