China’s new five-year plan for its pharmaceutical sector, released on September 18, places innovation and globalisation at the centre of a major repositioning from scale to innovation driven growth.
If this sounds similar to India Pharma Inc’s stated volume to value transition, it is only to be expected, as both move from their generics moorings.
A few days later, on September 22, an open letter from nine European pharma companies, cautioned that “Europe (is) losing ground to global competition” as “over $600 billion in pharmaceutical investment has been announced in the US and China in the last two years alone.” It makes the case that “European governments must create conditions that attract investment in next-generation medicines before it’s too late.”
Industry observers in India point out that what worries EU pharma leaders is a worry for India too. The question is, how will we respond? And will we respond fast enough?
China’s move away from its traditional APIs and intermediates towards innovative medicines could in fact be a short term opportunity for India.
Commenting on this aspect of China’s 15th five year plan Bharat Shah, MD, S Kant Healthcare and National President, IDMA pointed out that IDMA’s members are MSMEs with strong technical skills, so moving into and competing in this API space is not difficult, but what they need is more regulatory support, low interest rates and faster approvals.
But Namit Joshi, Chairman, Pharmexcil went to the heart of the issue when he pointed out that China has state owned companies so when Indian pharma companies go up against their Chinese counterparts, they are actually competing with a country, not a company. Both Shah and Joshi were part of a panel discussion at the Peptides & Complex Generics Symposium 2026 (PCG 2026).
China is already on this path and the new plan is designed to accelerate this transition. Dr Mahesh Bhalgat, CEO and founder, AAPM Therapeutics and an independent consultant, terms it “a bold plan where China displays ambition to further significantly step up its innovation game.” He also points out that the journey from being a leader in quantity (of pharma manufacturing) to a leader in quality (of pharma innovative assets) is already demonstrated by China having increased deal value considerably from single digit to $130+billion in 2025.
As per media reports quoting a Nomura research analysis, the plan lays out targets in 10 areas, including raising the average R&D expenditure-to-sales ratio, increasing the global market share of first-in-class and having more than five drugs with global annual sales exceeding $1 billion. These are framed as goals, without legal binding. The plan does not give details of how the companies are to achieve this nor an implementation path.
India Pharma Inc and policy makers must closely analyse the plan and modify India Pharma Inc’s strategic blueprint because it would have crucial implications for India.
But China’s government and regulators have traditionally supported the pharma industry with industry-friendly policies, geared towards growth. The plan does mention 20 pharma parks, which would no doubt help Chinese pharma companies meet these goals.
And where does India stand? The average R&D expenditure-to-sales ratio for most listed pharma companies in India is estimated to be below 10 per cent. The good news is that India is on the same path, with a clear push to move from volume to value.
In the near term, India’s pharma sector seems to be weathering the current turbulence reasonably well. The latest Crisil Ratings report predicts that the pharma sector will see stronger dose of revenue growth at 11-13 per cent this fiscal, up from 8 per cent last fiscal, driven by accelerating exports and firmer domestic demand. The analysis is based on nearly 190 Crisil-rated pharma companies, accounting for about half of the sector’s revenue last fiscal.
The caveat is that this growth spurt is unlikely to flow through fully to earnings, as inflation in raw material, energy and freight costs is expected to compress operating margins by 150-200 basis points (bps).
In tune with the experts in our cover story in this edition (Read story, Beyond US: New shores, new bets), India’s exports now show a balance between regulated and semiregulated markets, with approximately 57 per cent to the former, as per Crisil.
Also of significance is the fact that the sector’s domestic and export revenues are almost equal. The strong domestic buffer will be crucial, as potential US tariffs on pharma exports still hang over the sector.
Zooming back to the open letter from nine EU pharma leaders and China’s new five year pharma plan, these are the latest and clearest signals that the stakes are only getting higher.
Each country’s healthcare leadership is lobbying their governments and regulators for more supportive policies, to double down on securing the sovereignty and sustainable future of its pharma and biopharma sector, so that they are positioned to best serve the medical needs of their patient populations.
India Pharma Inc too will need much more policy and regulatory support, with quality and pricing guardrails, to map a future path that is sustainable, plays to its strengths, and safeguards patients’ lives in India and beyond.
VIVEKA ROYCHOWDHURY, Editor
viveka.r@expressindia.com
viveka.roy3@gmail.com