India, often called the “pharmacy of the world,” plays a crucial role in global healthcare by producing a substantial portion of the world’s generic medicines. However, despite its manufacturing prowess, India depends heavily on China for the Active Pharmaceutical Ingredients (APIs) that serve as the essential building blocks for these drugs. Approximately 70% of India’s API requirements are met by imports from China, making this a critical area of dependence.
The reasons behind this dependency lie in China’s advanced API manufacturing infrastructure and cost efficiencies. Over the years, China has invested significantly in large-scale, cost-effective API production, benefiting from economies of scale, streamlined regulatory processes, and ample access to raw materials. In comparison, API production in India faces higher costs due to stricter environmental regulations, increased labor expenses, and a lack of competitive large-scale manufacturing units.
This dependence has led to concerns over supply chain stability, especially during global disruptions. To address this vulnerability, the Indian government is now incentivizing domestic API production to reduce reliance on imports and strengthen India’s self-sufficiency in pharmaceutical manufacturing. However, building a robust domestic API industry will take time, requiring sustained investment and innovation in India’s pharmaceutical sector.