Relevance: GS III (Economy & Science) | Source: Economic Survey 2025-26 / The Hindu

1. The Big Picture: Pharmacy of the World

India is proudly known as the “Pharmacy of the World” because we supply affordable medicines to countries everywhere.

• High in Quantity (Volume): We are currently the 3rd largest medicine manufacturer in the world by volume. India alone produces 20% of all generic medicines used globally.
• How it Started: This massive success began with the Indian Patents Act of 1970. It allowed Indian companies to legally copy and mass-produce medicines cheaply by simply changing the manufacturing process.

2. The Main Problem: High Volume, Low Value

While we make a huge number of pills, we do not make as much money from them. This is the “Volume vs. Value” gap highlighted in the Economic Survey 2025-26.

• Low Profits: Even though India is 3rd in volume, we rank only 11th globally in terms of actual market wealth (value). This happens because basic “generic” drugs are sold at very low prices, leaving very thin profit margins for Indian companies.
• Dangerous Dependency: To manufacture these medicines, we need basic raw chemicals known as APIs. Currently, India imports a massive chunk of these raw materials from China. If that supply chain stops, our entire industry could freeze.

3. The Solution: Shifting to “Value”

To become a high-income, developed nation (Viksit Bharat), India’s pharma sector must change its strategy.

• Invent, Don’t Just Copy: Indian companies must invest much more money into Research & Development (R&D) to discover new, original drugs instead of just copying expired ones.
• Making Advanced Medicines: The future lies in high-tech medicines like Biosimilars and Biologics (complex medicines made from living cells). These are much harder to manufacture but sell for significantly higher prices globally.
• Becoming Self-Reliant: The government is funding huge Bulk Drug Parks across the country. The goal is to manufacture our own raw chemicals domestically and end our heavy reliance on Chinese imports.

UPSC Value Box

Key Concept	Simple Explanation for UPSC
Generics	Exact, low-cost copies of branded medicines. They can be legally made once the original company’s exclusive ownership rights (patents) expire.
APIs	Active Pharmaceutical Ingredients. This is the core raw chemical inside a tablet or syrup that actually cures your disease.
PLI Scheme	Production Linked Incentive. A government scheme that gives financial rewards to companies for manufacturing important goods (like APIs) right here in India.

With reference to the Indian pharmaceutical sector and recent Economic Surveys, consider the following statements:

1. India currently ranks as the largest pharmaceutical market in the world in terms of both production volume and overall market value.
2. The Indian Patents Act of 1970 initially allowed only “process patents” for pharmaceuticals, which heavily boosted the domestic generic drug industry.
3. Active Pharmaceutical Ingredients (APIs) are highly complex medicines manufactured exclusively using living organisms and stem cells.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)