2026-08-20

India has built one of the most formidable pharmaceutical manufacturing ecosystems in the world. Supplying over 80 percent of generic prescriptions dispensed in the US and the UK, running over 10,500 Good Manufacturing Practice (GMP)-approved facilities and exporting more than USD 30 billion in pharmaceutical products annually, India’s manufac turing credentials are beyond question. What has been slower to develop is the next chapter: a vibrant, internationally com petitive culture of original drug discovery and innovation. That transition, and the role of the India-US partnership in accelerat ing it, is what deserves serious industry attention today.

The R&D Gap India Must Acknowledge

India’s pharmaceutical sector has historically been structured around process excellence, cost efficiency and scale. These are genuine and hard-won strengths. The gap is in the origina tion of new chemical and biological entities. The US Food and Drug Administration (FDA) received approximately 1,500 In vestigational New Drug (IND) applications in 2023. China’s Na tional Medical Product Administration (NMPA) accepted 2,298. India’s Central Drugs Standard Control Organisation (CDSCO) processed approximately 180, the overwhelming majority of which were phase 2 and 3 trials for molecules owned by for eign companies using India’s patient pool. Indian companies filing INDs for their own molecules with their own IP are numbered in the tens.

This is not a criticism of the industry’s choices given the exist ing incentive structures. Generics were, and remain, immense ly valuable to global public health and to India’s economy. However, the innovative drug market is worth USD 1.6 trillion annually, and India’s share of that as an IP owner is effectively zero. The next phase of Indian pharma leadership requires changing that.

Why the US has Always Led in Innovation

The US’s dominance in pharmaceutical Research and Devel opment (R&D) is not accidental. It rests on 4 pillars built over several decades. First, the National Institutes of Health (NIH), with an annual budget of over USD 47 billion, funds extramural research that translates academic discoveries into commercial biotechnology ventures. Second, a venture capital ecosystem that invested USD 28 billion in biotech in 2024 alone supports long development timelines and high failure rates because the potential returns justify the risk. Third, the FDA offers well-es tablished regulatory pathways, including Fast Track, Break through Therapy, and Accelerated Approval, providing innova tors with both speed and regulatory certainty. Fourth, a robust IP framework, including regulatory data exclusivity, gives inno vators the commercial runway needed to recover development investments before generic competition enters the market.

These 4 pillars reinforce each other. Strong IP protection at tracts private capital. Private capital funds clinical develop ment. Clinical development generates FDA approvals. FDA approvals command premium pricing that funds the next cycle of NIH-seeded discovery. India is building toward versions of all 4 but needs to move with greater urgency and at greater scale.

What India Can Learn and Must Build

The most immediate learnings from the US model that India can apply are structural rather than financial. Regulatory data exclusivity is the single most important policy gap. India currently offers no meaningful data exclusivity period for novel drugs, which fundamentally undermines the economic case for originating molecules in India. Introducing a time-limited exclusivity window of 8 to 10 years for new chemical entities and biologics, aligned with India’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) obligations, would trans form the innovation calculus for every Indian pharmaceutical company considering a New Chemical Entity (NCE) program.

Translational research funding needs to scale dramatically. Biotechnology Industry Research Association Council (BIRAC) is a well-intentioned and genuinely useful institution, but it op erates on a budget that is a fraction of what is required. India needs a government grant program that supports companies from early discovery through phase 2 clinical development, with a mix of non-dilutive grants, soft loans and equity co-in vestment. Both early-stage discovery and late-stage clinical scale-up require sustained, patient public funding before pri vate capital takes over. This is how the US model works and it is how China’s model has been constructed over the past 2 decades.

A Biotech Innovation Sovereign Zone is the structural instru ment that could bring these elements together. The concept is a dedicated zone where entry requires filing a global IND with FDA, European Medical Agency (EMA) or equivalent regula tors, and where the IP is beneficially owned by the zone entity. 

The fiscal environment within the zone, near-zero income tax conditioned on export revenues, zero GST, free capital move ment linked to GIFT City’s IFSCA framework, would make India genuinely competitive with Ireland, Singapore and Switzerland as a domicile for original drug development. The zone would co-locate world-class shared infrastructure: BSL-3 facilities, GMP pilot manufacturing suites, analytical laboratories and clinical development support, making early-stage company formation viable without the enormous capital burden of build ing proprietary infrastructure. Cities like Hyderabad, Vizag, Bengaluru, Pune, Mumbai and Ahmedabad, each with existing life sciences strengths, are natural anchors.

How the India-US Partnership is already Shaping the Future

The India-US partnership in biopharma innovation is more sub stantive than is commonly appreciated. US-trained Indian scientists are returning in increasing numbers to build companies and lead research programs. Indian Contract Research Or ganisations (CROs) are conducting FDA-compliant clinical tri als for US biotechs at a scale and quality that were not possible a decade ago. Indian Contract Manufacturing Organisations (CMOs) are supplying clinical-stage biological manufacturing to US innovators. The bilateral iCET framework and the US-In dia Commercial Dialogue have both identified pharmaceutical innovation as a priority sector for deeper collaboration.

What the partnership needs now is a step change in ambi tion—joint government-to-government grant programs for translational research, mutual recognition agreements that re duce the friction of running clinical trials across both countries simultaneously, active facilitation of technology transfer from US academic institutions to Indian biotech startups and a de liberate effort to bring Indian diaspora scientists in the US, who number in the thousands in Boston, San Francisco and Re search Triangle Park, into structured engagement with Indian industry and institutions.

India’s pharmaceutical story is one of the great industrial achievements of the past half century. The next chapter, devel oping original molecules, owning the patents and commercial ising in global markets, is both the logical continuation of that story and a fundamentally different undertaking. The India-US partnership, at its best, is the bridge between the two.