India is making a strategic pivot toward pharmaceutical innovation with the launch of a ₹5,000 crore research and development fund. The initiative, part of the Promotion of Research & Innovation in Pharma MedTech Sector (PRIP) scheme launched in August 2023, aims to strengthen the country's capabilities in drug discovery, medical technology, and stem cell therapy over a five-year period.
The Department of Pharmaceuticals plans to float Expressions of Interest (EOI) in early March, followed by bid invitations in April. This move represents a significant step in India's ambition to evolve from being primarily a generic drug manufacturer to becoming a global leader in high-value pharmaceutical innovation.
Bridging the R&D Investment Gap
India's pharmaceutical industry currently holds a 3.4% share of the global market and is projected to reach $108 billion by 2030, growing at an 11% CAGR under business-as-usual conditions. However, the sector faces a substantial R&D investment gap compared to global competitors.
Indian pharmaceutical companies spend approximately $3 billion annually on R&D, significantly lower than the $50-60 billion invested in the US and $15-20 billion in China. The top 10 Indian pharma companies allocated just 7.2% of their sales to R&D in FY21, according to the Department of Pharmaceuticals.
"We have been always saying that the next wave of growth of pharmaceuticals industry will come from innovation," said Sudarshan Jain, Secretary General of the Indian Pharmaceuticals Alliance (IPA). "Until now, it was globalization and getting into different markets. The way the scheme is designed it will help the industry-academia collaboration, encourage research related activities, and creation of high-end jobs in R&D."
Funding Structure and Priority Areas
The PRIP scheme offers tiered financial support based on company size and project scope. Startups could receive up to ₹1 crore, while larger companies engaged in industrial research may secure ₹100-125 crore per project. The government has allocated ₹4,250 crore specifically for these initiatives.
The scheme focuses on six priority areas:
- Biopharmaceuticals
- Complex generic drugs including biosimilars
- Patented drugs or drugs nearing patent expiry
- Stem cell therapy drugs
- Medical devices
- Anti-microbial resistance
Additionally, the government will establish Centres of Excellence (CoEs) across all seven National Institutes of Pharmaceutical Education & Research (NIPERs), with a ₹100 crore allocation this year. Each CoE will specialize in fields such as medical devices, drug discovery, phytopharmaceuticals, and production technology.
Reducing Dependency on Imported APIs
A key objective of the PRIP scheme is to reduce India's heavy reliance on China for Active Pharmaceutical Ingredients (APIs) and intermediates, which has made supply chains vulnerable to disruptions.
Dr. Saarthak Bakshi, Healthcare Entrepreneur and CEO of RISAA IVF, highlighted this aspect: "This initiative is a step toward reducing our dependence on China for key raw materials. By strengthening domestic R&D, India can develop alternative sources for APIs, ensuring supply chain resilience."
He added, "With increased R&D investment, India can boost its API manufacturing capabilities, reduce import reliance, and establish a strong ecosystem for bulk drug production, ultimately making the country a global pharmaceutical powerhouse."
Concerns from the Medical Device Sector
While the pharmaceutical industry has largely welcomed the initiative, the medical device sector has expressed concerns about fund allocation. Rajiv Nath, Forum Coordinator of the Association of Indian Medical Device Industry (AiMeD), has criticized the scheme's limited focus on medical devices.
"The government has given very little weightage to the medical device industry, and the scheme is largely focused on the pharmaceutical sector. We will discuss the matter with the government and will be seeking amendments, or the scheme will remain on paper only," Nath warned.
Despite these concerns, the Department of Pharmaceuticals notes that the number of healthcare and life sciences startups registered with DPIIT has more than doubled over the past four years, rising from 387 in December 2020 to 809 in December 2024, indicating growing innovation potential in the sector.
Industry-Academia Collaboration
The PRIP scheme is expected to foster stronger collaboration between research institutions and industry. Dr. Bakshi emphasized this potential: "This initiative will bridge the gap between research and commercialization. Universities and research institutes will collaborate with pharma and medtech firms on cutting-edge projects, leading to patentable innovations."
To ensure effective utilization of funds, the government is likely to implement a structured framework involving public-private partnerships, expert advisory panels, and milestone-based funding. Regular audits, industry feedback, and performance assessments will be crucial for accountability and transparency.
India's Pharmaceutical Landscape
India's $50 billion pharmaceutical market is evenly split between domestic sales ($23.5 billion) and exports ($26.5 billion). The country ranks third globally by volume and 14th by value, with exports to highly regulated markets like the US, EU, and Japan comprising more than half of total exports.
While Indian pharma companies have dominated the generic medicine market in the US, accounting for 47% of all generic prescriptions in 2022, growth in this segment is plateauing due to weaker demand, increased competition, and expiring patents.
India conducts over 54,000 clinical trials annually and has a workforce of more than four lakh AI professionals, making it the second-largest AI talent pool globally. The country also leads in biosimilar drug development, with 98 approved biosimilars and over 40 currently undergoing clinical trials.
As the PRIP scheme moves from planning to implementation, its success will depend not only on funding but also on regulatory reforms and effective public-private collaboration. If executed efficiently, this initiative could mark a transformative shift in India's pharmaceutical sector, positioning the country as a global leader in pharmaceutical innovation rather than just a generic drug manufacturer.
