1. The US is the leading destination market for greenfield pharmaceuticals FDI, while it is also the top source market.
2. Between 2019 and 2023, the pharmaceuticals sector was the fourteenth largest FDI sector in terms of the number of greenfield investments. The pharmaceuticals sector accounts for 2% of global greenfield FDI projects.
3. Greenfield foreign direct investment is when a company invests abroad to establish a new physical presence or expand an existing operation.
4. Greenfield investments create jobs and/or involve a capital investment into the foreign location. Other forms of FDI, such as mergers and acquisitions, are not included as part of this definition.
5. Combined, the top ten destination countries account for 57.1% of total pharmaceuticals FDI projects.
6. The leading destination country for pharmaceuticals FDI is the US. Germany, France and the UK are also popular pharmaceuticals investment hubs.
7. According to GlobalData’s FDI Projects database, United Kingdom-based companies were the leading source of greenfield pharmaceuticals investments into the US.
8. With respect to outbound FDI, the US was the leading pharmaceuticals source market. US-based companies held a 25.5% share of total outbound pharmaceuticals FDI projects. Germany, UK, Switzerland and Japan are also top source markets for pharmaceuticals FDI.
MOST ACTIVE FDI COMPANIES IN THE PHARMACEUTICALS INDUSTRY
1. Novartis is the pharmaceuticals company most prolific at making international expansions, followed by AstraZeneca and E. Merck.
2. Novartis has been the most active pharmaceuticals greenfield investor between Q1 2019 and Q2 2024, according to GlobalData’s FDI Projects Database. The parent company has been actively investing through several of its subsidiaries/company divisions.
3. Greenfield foreign direct investment is when a company invests abroad to establish a new physical presence or expand an existing operation. Greenfield investments create jobs and/or involve a capital investment into the foreign location. Other forms of FDI, such as mergers and acquisitions, are not included as part of this definition.
4. The majority of Novartis investments were in the drug manufacturers subsector. In fact, 92.3% of its total foreign investments were in this subsector. It also created projects across a further four subsectors.
5. By business function, most (48.1%) of Novartis projects were related to manufacturing. R&D and headquarters were the next most popular operations undertaken by Novartis.
6. The company has been active across six world regions, mainly focused on Western Europe which received 42.3% of the company’s greenfield investments between Q1 2019 and Q2 2024. Its top three destination countries (by number of greenfield FDI projects) were Austria, Slovenia and Mexico. Combined these three countries account for 37.5% of its total number of pharmaceuticals investments.
7. Novartis created more FDI projects in 2022 compared to any other year between Q1 2019 and Q2 2024.
8. Other leading FDI project generators in the pharmaceuticals industry include AstraZeneca, E. Merck, Bayer and Sanofi.
9. The US is the leading source market for outbound pharmaceuticals greenfield FDI projects. The country accounts for 25.4% of total outbound pharmaceuticals investment projects. There have been 164 unique parent companies from the US that have announced pharmaceuticals FDI projects between between Q1 2019 and Q2 2024.
THE FOREIGN INVESTMENT OUTLOOK OF INDIA’S PHARMACEUTICALS INDUSTRY
1. India’s pharmaceutical industry is currently ranked third globally for pharmaceutical production by volume and 14th by value. The country has a well-established domestic pharmaceutical industry, featuring a network of around 3,000 drug companies and approximately 10,500 manufacturing units.
2. The future of this industry appears promising, with the Indian pharmaceutical products market projected to achieve a value of approximately US$130 billion by the end of 2030. Concurrently, the global pharmaceutical products market is expected to surpass the US$1 trillion mark in 2023.
3. Greenfield pharmaceutical undertakings in India are allowed 100 percent foreign direct investment (FDI) through the automatic route. For brownfield pharmaceutical investments, 100 percent FDI is permitted but with 74 percent under the automatic route and the remainder requiring approval from the Indian government.
4. The cumulative FDI equity inflow into the drugs and pharmaceuticals industry in India from April 2000 to December 2022 was US$21.22 billion, accounting for nearly 3 percent of the total FDI inflow across all sectors. Indian pharmaceutical companies have firmly established their presence in the prescription markets of the US and EU, with a substantial number of US FDA-approved manufacturing facilities operating in India.
5. Major investors in India’s pharmaceutical industry are AstraZeneca, Dr. Reddy’s, GSK, Divi’s, Zydus, Novartis, Pfizer, Sun Pharma, Teva, Mylon, and Johnson & Johnson.
6. The Indian pharmaceutical industry currently holds a market share worth approximately US$50 billion. Industry analysts project it to grow at a compound annual growth rate (CAGR) of 10.7 percent through 2030. It is anticipated that the pharmaceutical market in India will surge to US$65 billion by 2024 and double by 2030, reaching US$130 billion.
7. India is currently the second-largest contributor to the global biotech and pharmaceutical workforce.
8. The Indian pharmaceutical industry, often known as the “Pharmacy of the world,” plays a pivotal role globally. It covers a wide spectrum, including the development of generic drugs, over-the-counter (OTC) medicines, bulk drugs, vaccines, contract research, biosimilars, and biologics.
9. India’s significance in vaccine production is remarkable, particularly in DPT, BCG, and Measles vaccines. India contributes to 60 percent of global vaccine production, fulfilling up to 70 percent of WHO’s DPT and BCG vaccine demand, as well as 90 percent of the measles vaccine demand.
10. Additionally, India is the world’s largest provider of generic medicines, with a 20 percent global supply share by volume. The country hosts over 3,000 pharmaceutical companies, supported by 10,500 manufacturing facilities and a skilled workforce.
11. India has about 500 active pharmaceutical ingredient (API) manufacturers, contributing 8 percent to the global API industry. Its production of 60,000 generic brands spanning 60 therapeutic categories accounts for 20 percent of global generics supply. India’s role in providing affordable HIV treatment is globally recognized, making Indian medicines preferred choices worldwide.
12. According to the survey report by the Department of Pharmaceuticals in February 2023, there is a robust network of 118 pharmaceutical clusters that span over 19 states and union territories. Maharashtra leads the tally with the highest number of 40 pharma clusters.
13. According to the Department of Pharmaceuticals report, there are currently 7,673 pharmaceutical industries in operation, averaging 65 units per cluster. Notably, there are significant pharmaceutical clusters in Taloja, Maharashtra, as well as in Visakhapatnam, Tirupati, and NTR-Krishna-Palnadu in Andhra Pradesh, each hosting over 400 pharmaceutical industries.
14. Furthermore, the annual domestic pharmaceutical production by the industries within 117 pharmaceutical clusters across the country is estimated to be around 611,120 tonnes. Additionally, the annual export value of pharmaceutical products from these clusters totals approximately 576,140 tonnes.
15. Active pharmaceutical ingredients - Active pharmaceutical ingredients represent a crucial component within the pharmaceutical industry, constituting approximately 35 percent of the market. These APIs serve as the biologically active constituents of drugs, responsible for inducing the intended medical effects. India stands as the 3rd largest producer of APIs, holding an 8 percent share in the global API Industry. With the manufacturing of over 500 different APIs, India contributes 57 percent of APIs to the prequalified list of the World Health Organization (WHO).
16. Key players in the India API market include Solara, Aurobindo Pharma Limited, Dr. Reddy’s Laboratories, Lupin Limited, Sun Pharmaceutical Industries Limited, Divi’s Laboratories Ltd., Aarti Drugs Ltd., Neuland Labs, Century Pharmaceuticals Ltd., and Proventus Life Sciences Pvt Ltd., per research from Invest India.
17. Biosimilars - The Indian biosimilars market is poised to witness a substantial growth trajectory, with an estimated CAGR of 22 percent, reaching a value of US$12 billion by 2025. This expansion would signify nearly 20 percent of the entire pharmaceutical market in India.
18. Formulations - In terms of volume, India ranks as the largest exporter of formulations, commanding a 14 percent market share and securing the 12th position in terms of export value. The industry anticipates a double-digit growth rate over the upcoming five years.
19. Packaging - Per industry researchers, the Indian pharmaceutical packaging market was valued at US$1.4 billion in 2020, with projections to reach US$3.02 billion or US$3.25 billion by 2030, at a CAGR of 7.54 percent or 9.7 percent, respectively. According to data from Mordor Intelligence, the pharmaceuticals market size in India was projected to reach US$15.75 billion in 2023 and US$29.41 billion by 2028, the latter at a CAGR of 13.30 percent.
20. OTC drugs - The OTC drug market in India was valued at INR 448,19 billion (US$5.38 billion) in 2022, per data from ResearchAndMarkets. In 2022, vitamins and minerals dominated the OTC drugs market with a significant share of 36.84 percent. Furthermore, the segment of cold and cough remedies is anticipated to experience rapid growth, attributed to the significant climate changes witnessed recently and rise of air pollution.
21. Contract Research and Manufacturing Services (CRAMS) has emerged as among the swiftly expanding segments within the Indian pharmaceutical and biotechnology industry. Pharmaceutical companies engage in outsourcing services through contract research organizations (CROs) and contract manufacturing organizations (CMOs) to meet various research and manufacturing needs.
22. Indian drugs find their way to over 200 countries worldwide, with the United States, Belgium, South Africa, UK, and Brazil serving as the top five destination markets. The exports of Indian drugs and pharmaceuticals grew to INR 2.04 trillion (US$24.51 billion) in 2022-23, constituting 5.71 percent of the country’s total exports.
23. India accounts for 20 percent of the global exports of generic drugs and its key market is North America. India accounts for 60 percent of global vaccine output and is a significant source of affordable vaccines.
24. Under the Vaccine Maitri initiative (as on May 19, 2023), India had delivered more than 298 million COVID-19 vaccine doses to approximately 100 countries worldwide. Prominent research institutions in India are the Indian Council of Medical Research (ICMR) and the National Institute of Virology (NIV).
25. India’s medical device exports witnessed a robust 16.15 percent growth in FY 2022-23, reaching INR 278.18 billion (US$3.34 billion), up from the INR 239.50 billion (US$2.87 billion) reported in the previous fiscal year.
26. PLI Schemes - The Government of India has initiated three Production Linked Incentive (PLI) Schemes: Bulk Drugs (2020), Medical Devices (2020), and Pharmaceuticals (2021). These schemes aim to achieve self-reliance, enhance domestic manufacturing, and draw significant investments to the sector.
27. Financial incentives are disbursed under the PLI Schemes based on the term of the scheme, the company’s committed investment, and actual sales made by the selected applicant for the eligible products. Hence, selected beneficiaries do not automatically qualify for incentives and must meet the Scheme criteria during audit.
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