India’s pharmaceutical industry has built a strong global reputation as the “pharmacy of the world,” driven by its leadership in generic medicines and cost-efficient manufacturing. However, evolving into a global innovation hub demands a different ecosystem—one defined by higher R&D investment, stronger clinical research capabilities, greater Intellectual Property (IP) creation and an increased appetite for risk.

To understand what this transition entails, Pharma Industrial India spoke to industry experts on how the country can move beyond its generics-driven success and position itself as an “innovator of the world.”

India’s pharmaceutical industry is undergoing a gradual but significant shift—from a model built on cost efficiency and execution to one increasingly driven by scientific innovation and long-term value creation. While the intent to innovate is clearly visible, industry leaders believe the transition remains uneven and still in its early stages. For decades, Indian pharma has excelled at precision execution.

As Hari Kiran Chereddi, MD and CEO, HRV Pharma, pointed out, success has traditionally depended on reducing costs, accelerating filings and strengthening regulatory capabilities. However, innovation demands a fundamentally different approach— one that involves accepting failure, committing to long development timelines and investing without immediate returns. These are not merely strategic shifts, but changes that require entirely different organisational mindsets.

In this evolving landscape, many companies are adopting what can be described as an “innovation-adjacent” strategy. Investments are increasingly flowing into areas such as drug delivery systems, biosimilars, complex generics, peptide Active Pharmaceutical Ingredients (APIs) and computational chemistry. While these may not yet represent breakthrough innovation, they are scientifically robust, capital-intensive and capable of generating IP, making them a practical starting point for much of the industry.

“The companies truly prepared for this journey, those willing to endure long development cycles and accept the high likelihood of failure, remain few. These include Biocon, Divis, Sun Pharma’s innovation arm, and a handful of well-funded biotech startups. The rest will follow once the ecosystem makes the process less risky,” Chereddi said. At the same time, broader industry trends indicate a clear directional shift.

Sagar Pawar, Partner and Lead–Lifesciences and Medical Devices, Deal Advisory–M&A Consulting, KPMG India, highlighted, Indian pharma is steadily moving beyond small-molecule generics into more complex domains such as biosimilars and GLP-1 therapies. Contract Research, Development and Manufacturing Organisations (CRDMOs) are also leveraging their chemistry expertise to expand into next-generation areas, including precision medicine, Antibody-Drug Conjugates (ADCs), RNA-based therapies, and cell and gene therapies.

Yet, a key constraint persists: capital. Indian capital markets continue to favour predictable, generics-led earnings over long-term, high-risk research and development (R&D) investments. This dynamic limits the willingness of many companies to commit to breakthrough innovation, which inherently involves uncertainty and delayed returns. Despite these challenges, optimism about India’s trajectory remains strong.

Jashan Bhumkar, Director, Soujanya Group, believed the country is more prepared than ever before, though readiness varies significantly across the ecosystem. Only a small group of companies currently possess both the financial capacity and scientific depth to pursue meaningful innovation at scale.

He emphasised that true innovation cannot be viewed as an extension of generics success. It requires longer capital cycles, stronger translational science, deeper clinical capabilities and a fundamental belief in IP-led value creation. According to him, India is now transitioning from being “process-smart” to becoming “science-smart”—a shift that is real, but still unfolding. Many companies are actively investing in complex generics, specialty products, biosimilars and differentiated delivery systems.

However, fewer are prepared to consistently support first-in-class discovery programmes that may take 10 to 15 years to mature. The broader picture, therefore, is one of partial readiness. Some companies are already positioned for innovation, others are gradually building capabilities, and the ecosystem as a whole is evolving to reduce risk and enable wider participation.

Bridging the R&D Gap: Capital, Capability and Structural Reform
India’s relatively low R&D spending in pharma is not merely a financial issue—it reflects a deeper structural challenge. Chereddi noted that the gap is rooted in the absence of a high risk, high-reward capital ecosystem that supports long-term innovation.

Globally, large pharmaceutical companies invest nearly 20 percent of their revenue into R&D because their capital ecosystems are aligned with long-term outcomes. Investors, venture networks and licensing frameworks are structured to reward innovation. In contrast, Indian capital markets still tend to view R&D as a cost rather than an opportunity. Until this perception shifts, companies face a fundamental dilemma: increasing R&D investment often places them at a short-term competitive disadvantage.

A critical requirement is the ability to monetise innovation effectively. If an Indian company develops a novel molecule, it must be able to licence it globally at fair value and secure co-development partnerships with large pharmaceutical companies. While such opportunities exist, they remain inconsistent. Strengthening Intellectual Property (IP) frameworks, enforcement mechanisms and a culture of early-stage licensing will be essential to unlock value.

India’s large and diverse patient population offers a natural advantage for clinical research. However, gaps remain in the Contract Research Organisation (CRO) ecosystem, the quality of ethics committees and the global credibility of clinical data. Building trust in Indian clinical trials will significantly enhance the country’s attractiveness as a cost-efficient and reliable research destination.

Besides, policy support must move beyond intent to execution. Initiatives such as the Biopharma SHAKTI Mission signal progress, but their impact will depend on implementation. Measures such as R&D tax incentives, government co-investment in early-stage biotech and faster regulatory pathways for novel molecules can meaningfully reduce innovation risk.

As Bhumkar stressed, the transformation must begin with a mindset shift. Indian pharma needs to move away from viewing R&D as a cost centre and recognise it as a long-term strategic asset. Without this philosophical change, structural reforms alone will have limited impact.

Further, breakthrough innovation often requires hundreds of millions of dollars over decades, compared to less than USD 3 million for a typical generic product, as Pawar highlighted. This stark contrast underscores the need for differentiated funding models. Innovation capital cannot rely solely on internal cash flows; it requires dedicated private and public funding pools designed for long-gestation, high-risk investments.

India’s scientific talent is strong, but the transition from discovery to development, scale-up and commercialisation remains fragmented. Strengthening these linkages is critical to ensure that promising research translates into viable products. This is often where value is lost in the innovation chain.

At the company level, alternative approaches are also emerging. HRV Pharma, for instance, focuses on reducing development costs through computational chemistry for route optimisation and asset-light manufacturing networks. This demonstrates that innovation does not always require massive capital outlays, but it does demand smart, long-term and risk-tolerant investment strategies.

Competing on Strengths, Not Imitation
India’s path to pharmaceutical innovation will not mirror established global hubs like Boston or the Bay Area, and, as industry leaders asserted, it does not need to. While the US biotech ecosystem has been built over decades through deep integration between academia, venture capital and large pharmaceutical companies, India’s opportunity lies in developing a distinct, advantage-driven innovation model.

Chereddi informed that the US cluster model, anchored by institutions such as MIT and Stanford, and supported by a dense venture capital network, took nearly 50 years to evolve. Replicating that system in a short timeframe is neither realistic nor necessary. Instead, India must build on its own structural strengths.

The country produces a vast pool of highly skilled chemistry and biology graduates every year. The cost of running advanced functions such as computational chemistry, medicinal chemistry and regulatory science remains significantly lower than in global hubs like Boston or Basel. This provides a durable competitive advantage, provided the right institutional support is in place.

India’s large and diverse patient population offers a powerful edge in clinical research. From rare diseases to complex metabolic conditions and neglected tropical diseases, the country enables faster, more cost-effective trials with unmatched phenotypic diversity. This creates both scientific and economic advantages in drug development.

With over three decades of accumulated expertise, India has developed strong capabilities in process chemistry. The ability to take a novel molecule and translate it into a cost-efficient, scalable and regulatory-compliant manufacturing process is deeply embedded in the industry. When combined with up stream innovation, this creates a robust end-to-end value chain.

Adding to it, Pawar said, “Biotech hubs like Genome Valley offer strong infrastructure and talent for affordable biologics, biosimilars and vaccines, but the US still far out scales India in discovery-stage research funding and ecosystem depth. The Promotion of Research and Innovation in Pharma MedTech (PRIP) scheme announced in 2023 to enable discovery, development and commercialisation of drugs had an outlay of USD 0.45 billion for biomedical research support while in contrast the US's NIH has an annual budget of over USD 45 bilion."

He also notified that China is also rapidly expanding its role in global drug development, contributing 46 percent of new molecules entering human trials in early 2025, and now accounts for roughly half of global licensing deal value. This momentum is driven by a decade of sustained government reforms like ICH membership, streamlined regulatory pathways and supportive Hong Kong Stock Exchange listing rules that ease financing for early-stage biotech companies.

Bhumkar reinforced that India’s competitive edge lies not inimitation, but in integration—combining scientific depth with frugal development, process excellence and scalable manufacturing. According to him, three areas stand out:
• Cost-efficient development infrastructure: High-quality chemistry, process development, formulation, analytics and manufacturing at a very compelling cost base.
• Industrialisation capability: The ability to scale molecules, biologics and advanced therapies efficiently from lab to market.
• Platform-led innovation: Opportunities across biologics, biosimilars, fermentation technologies, advanced intermediates and tech-enabled development models.

This convergence of capabilities positions India not just as a discovery hub, but as a global industrialisation engine for innovation.

The Innovation Handshake: Bridging Startups and Big Pharma
India’s next wave of pharmaceutical innovation is unlikely to emerge from large pharma companies or biotech startups alone. Instead, it will be shaped at the intersection of the two, where scientific ambition meets execution strength.

Large Indian pharmaceutical companies bring significant advantages: capital, regulatory expertise, global commercial networks and the ability to scale therapies across markets. However, according to Chereddi, their core strength lies in execution rather than exploration. Optimised for efficiency and risk management, they are not naturally structured to lead break through innovation.

On the other hand, biotech startups are built for exploration. They bring scientific boldness, speed and a willingness to pursue high-risk ideas. Increasingly, Indian startups are also pushing into advanced areas such as Artificial Intelligence(AI)-driven drug discovery and translational science. Yet, they face persistent constraints—limited access to capital, manufacturing infrastructure and the ability to advance early discoveries into regulatory-ready candidates.

The real opportunity lies not at either end, but in connecting these complementary strengths.

Chereddi highlighted that a platform-driven model is beginning to emerge, one that links early-stage scientific innovation with the execution capabilities of larger organisations. In this model, startups generate ideas and early scientific insights, and platform companies and large pharma provide manufacturing, regulatory expertise and market access.

Value is created where these elements converge. This collaborative approach has the potential to significantly accelerateinnovation timelines and improve success rates.

In Pawar’s opinion, Indian biotech startups are pushing into AI-driven discovery and translating academic science, but large pharma still holds the regulatory muscle and capital needed to bring breakthrough therapies to market. Bridging this gap will require expanding early-stage funding well beyond the current PRIP limit of ~ INR 5 crore to help startups advance higher-risk innovation.

Bhumkar emphasised that both sides will remain equally important in the innovation journey. Large pharma companies will continue to play a critical role in scaling innovation, given their regulatory experience, manufacturing capabilities and commercial reach. Startups, meanwhile, will drive discovery through focused, high-conviction scientific exploration.

“In my view, India’s next wave will not come from choosing one over the other. It will come from a handshake between the two. Startups will generate new scientific possibilities. Larger companies will validate, scale and globalise them. The real unlock will be when Indian pharma becomes confident enough to partner early with Indian biotech instead of waiting for external validation before taking it seriously,” said Bhumkar.

Building the Innovation Ecosystem: Collaboration over Isolation
India’s next phase of pharmaceutical innovation will not be driven by individual excellence alone, but by the strength of its ecosystem. As industry leaders emphasise, no single entity—whether a large pharma company, an academic institution or a well-funded startup—can independently own the entire innovation process.

Drug discovery today demands a convergence of capabilities: molecular biology, computational chemistry, process chemistry, toxicology, clinical development, regulatory expertise and global commercialisation. These competencies are inherently distributed, making collaboration not optional, but essential.

One of the most significant shifts shaping this ecosystem is the rise of specialised technology platforms. Chereddi explained that the current AI inflection point, particularly in computational chemistry, is transforming early-stage discovery and route optimisation.

Unlike generic AI tools, domain-specific platforms can dramatically accelerate timelines. For instance, integrating computational chemistry with pharma expertise can reduce synthesis route exploration from months to weeks. This kind of progress illustrates how deeply embedded collaboration between technology and life sciences can unlock meaningful efficiencies. Academic institutions remain a critical, yet under-leveraged, component of India’s innovation ecosystem. While Indian universities are strong in fundamental research, the pathway from discovery to development remains fragmented.

Bridging this gap requires more than intent, it requires structured collaboration models. Mechanisms such as sponsored research programmes, IP-sharing agreements and industry fellowships can help translate academic insights into viable development candidates.

Pawar stated that globally, industry–academia collaboration has been a major driver of breakthroughs, including mRNA vaccine development during COVID-19. In India, however, such partnerships have historically been limited. Encouragingly, recent initiatives such as BIRAC-led incubators and Centres of Excellence (CoEs) at National Institutes of Pharma Education and Research (NIPERs) are beginning to strengthen these linkages.

Bhumkar underscored that innovation ecosystems succeed when ideas, capital, infrastructure and execution talent move fluidly across institutions. India, therefore, needs to move beyond collaboration as a concept and build a functional collaboration architecture. Each stakeholder brings a distinct strength.
• Pharma companies: Market access, regulatory expertise and scale
• Startups: Agility, focus and unconventional thinking
• Academia: Deep science and original research
• Technology firms: AI, data science, modelling and digital biology

Individually, these capabilities are incomplete. Together, they can significantly compress development timelines and improve the probability of success.

A key opportunity for India lies in building translational platforms that integrate multiple stages of drug development—discovery, process chemistry, biology, formulation, analytics, clinical strategy and manufacturing readiness—simultaneously rather than sequentially.

This parallel approach can dramatically reduce the distance between an idea and a market-ready product, addressing one of the biggest inefficiencies in traditional drug development. The future of Indian pharma innovation may not belong to companies with the largest in-house capabilities, but to those who can effectively orchestrate distributed networks.

As Chereddi remarked, success will depend on the ability to build and manage collaborative ecosystems rather than attempting to internalise every capability. Bhumkar echoed this view, emphasising that the most successful innovators will be those with the strongest networks—not just the biggest laboratories.

Biopharma Shakti: From Policy Intent to Measurable Innovation Outcomes

India’s Biopharma SHAKTI Mission marks a timely and important policy signal, reflecting a growing recognition that the country’s future in pharmaceuticals will depend not just on manufacturing scale, but on innovation capability. However, as industry leaders point out, the true impact of the initiative will depend entirely on execution, not intent.

India has a history of ambitious policy announcements that fall short at the implementation stage. The Production Linked Incentive (PLI) scheme demonstrated both potential and limitations, useful, but not transformative. Biopharma SHAKTI now faces a similar test: whether it can translate vision into sustained, outcome-driven change.

The programme, backed by an INR 10,000 crore outlay over five years, aims to strengthen key pillars of the innovation ecosystem. Bhumkar mentioned that it signals a shift in policy thinking, from volume-led manufacturing to capability building across biologics, biosimilars, clinical research infrastructure, regulatory systems and workforce development.

Pawar highlighted that planned initiatives like expanding NIPER institutions, strengthening the CDSCO and building a network of over 1,000 clinical trial sites are meaningful steps towards improving India’s innovation capacity.

Public funding should catalyse private investment, not replace it. This requires linking funding to measurable scientific milestones such as IND filings, clinical phase transitions and licensing outcomes, rather than input-based metrics like infrastructure or headcount.

India’s challenge is not in generating molecules, but in translating them into credible clinical data and market-ready products. Strengthening CRO quality, improving ethics committee standards and building global trust in Indian clinical data will be critical.

“It needs to turn IP generation into IP monetisation. A molecule discovered in India that cannot be licensed, co-developed, or partnered for fair value is not an innovation asset; it is a lost cost. The mission must set up licensing frameworks, support big pharma co-development pathways, and establish the infrastructure that converts scientific output into commer cial results. This is where most Indian policy falls short,” said Chheredi.

He also highlighted a more subtle, but critical signal: global venture capital investing in Indian biotech at the pre-clinical stage for scientific uniqueness, not just cost efficiency.

Bhumkar expanded this framework further, identifying five markers of transformation at scale:
• Creation of globally relevant product and platform IP
• Indian-origin assets entering global clinical pipelines
• A mature innovation financing ecosystem supporting deep science
• Efficient translational infrastructure, including faster approvals and stronger data credibility
• Global recognition of India as a creator of innovation, not just a manufacturing hub

While Biopharma SHAKTI is a step in the right direction, Pawar noted that significantly larger public and private R&D investments will be required to compete globally. Progress will also be reflected in softer indicators such as the return of skilled researchers, deeper discovery pipelines and broader adoption of innovative therapies.

The consensus is clear: missions do not create ecosystems—execution does.

India’s pharmaceutical industry became the “pharmacy of the world” through decades of discipline, scale and consistency. Replicating that success in innovation will require the same level of commitment, this time focused on scientific originality, patient capital and institutional strength.

Biopharma SHAKTI has the potential to accelerate this transition. However, its success will ultimately be measured not by its budget or ambition, but by a single outcome: how many Indian-origin molecules reach global patients in the coming decade.