China+1 moment for pharma: How India can convert opportunity into long-term contracts 

The global healthcare industry has long relied on China for the majority of its active ingredients, APIs, and chemicals, making the supply chain vulnerable to disruptions. However, the “China+1” strategy has emerged as a crucial shift, offering a unique opportunity for India to step into a leadership role in global pharma. The ‘China+1’ strategy is more than just an idea that is discussed in boardrooms; it has now become a critical, evolving force that is changing the entire landscape of the Indian pharma industry to such an extent that long-term planning will no longer be sufficient to prepare for these changes. 

For years, the global healthcare industry’s reliance on a single source for most of the raw materials including APIs and other chemicals meant that there were very few alternatives if that single source failed to deliver. As of 2020, all of the supply chains of the global healthcare industry began to evolve, with the introduction of various new laws in the early 2020s, such as the US BIOSECURE Act passed in 2025, requiring all businesses worldwide to diversify their supply chains and the associated risk. As a result, India has become a unique opportunity for its economy to no longer serve as a low-cost country for pharma but instead as a reliable partner for key long-term contracts. 

The heavy reliance of the entire global healthcare system on a limited number of suppliers has made it susceptible to breakdown. China +1 is likely to be able to eliminate this problem and simplify the manufacturing base (on geographical basis), while also ensuring that patients can have access to their medications. Moreover, India appears to be the best option for this company. The strength of India’s pharmaceutical exports already indicates its strength, as it has increased its drug export from approx. $30.47 billion in FY25 with an increase of 9.4 per cent from FY24 and to approx. $28.29 billion by Feb. 26. In this regard, we can see that the world has already made a choice when placing its orders. 

To be able to convert these first conversations into longterm agreements — some of which could span up to 10 years — Indian companies must create an understanding of their differentiation in the marketplace: reliability, quick delivery and transparency about everything. India has been winning new contracts largely due to low prices; however, in the future we will determine whether we win contracts based on our ability to guarantee supply with the desired quality. With that said, we need to move away from a “just-in-time” manufacturing model and adopt a “just-in-case” model that allows us to develop our capacity to deal with unanticipated events. Around the globe, companies are now interested in finding partners who can guarantee shorter lead times and demonstrate the competence of their manufacturing process. 

Transparency must be a part of the equation for these companies; they expect their partners to provide information, rules and standards with the same level of care as the quality of the drug itself. In addition, this scenario presents a significant opportunity for MSMEs, in India, which have historically received little attention as potential suppliers even though they provide the flexibility upon which the success of the Indian pharma industry really depends. These businesses are very capable of providing customers with small quantities of specialised products that larger companies may not consider viable options. 

MSMEs can take advantage of many government supportive initiatives (like the nearly Rs 15,000 crore Production Linked Incentive scheme) designed to increase local production by upgrading their facilities to meet international standards. The ultimate goal of these businesses is to become trustworthy partners in the development and manufacture of drugs (as CDMOs). With so many countries looking for suppliers to replace specific restricted suppliers/manufacturers, Indian MSMEs that focus on quality will have an excellent opportunity to leverage this market. Over the next three to five years, many of these pilot projects will evolve into larger, long-term contracts, and bring substantial new revenue to our country. The long-term goal of the Indian pharma industry is to grow from its current value of $60 billion to $130 billion by 2030. In order to achieve these goals, Indian companies need to change their mindset. They do not just sell chemicals; they sell trust and dependability. 

India has a unique opportunity with the “China Plus One” Moment, to show that it should permanently have a leadership position in global healthcare. If the healthcare and pharma industries continue to drive innovation through complex generic drugs, biosimilars, and personalised medicine as well as solid supply chains, India can not only support global economic growth but will emerge as the most significant and reliable healthcare provider to the world.