Investors bullish on Indian pharma

During the fiscal year 2022-23, FDI crossed $2 billion with FDI investment into the pharmaceuticals sector in 2022-23 being $2.05 billion, as compared to $1.41 billion reported in the previous fiscal year. The growth comes after a decline of five per cent registered in the fiscal year 2021-22 as compared to the $1.49 billion foreign equity infusion in 2020-21. After a dismal 2021-22, the FDI inflow into the pharmaceutical sector in the country has been growing steadily all through year 2022-23

The financial year 2022-23 happened to be a good year for the pharmaceutical industry in the country as foreign direct investment (FDI) equity inflow into the pharmaceutical industry and related sectors has registered an impressive growth of 45.4 per cent in the fiscal year ended March 2023.

According to data available with the Union Ministry of Commerce and Industry, during the fiscal year 2022-23, FDI crossed $2 billion with FDI investment into the pharmaceuticals sector in 2022-23 being $2.05 billion, as compared to $1.41 billion reported in the previous fiscal year. The growth comes after a decline of five per cent registered in the fiscal year 2021-22 as compared to the $1.49 billion foreign equity infusion in 2020-21. After a dismal 2021-22, the FDI inflow into the pharmaceutical sector in the country has been growing steadily all through year 2022-23.

The FDI equity inflow into the pharmaceutical industry has registered a strong growth in the third quarter of the current fiscal year ending December 31, 2022. In the third quarter alone, the FDI infusion into the pharmaceutical sector has crossed one billion dollars. The growth is not limited to one quarter, which is evident from the fact that the total FDI inflow for the three quarters of the current fiscal year ending December 31, 2022 has crossed the total foreign investments in the entire FY 2021-22 ending March 31, 2022.

Fund infusion by foreign investors into the sector for the period from April to December 2022 stood at $1.82 billion as compared to the whole year figure of $1.41 billion in 2021-22. The three-month figure is also higher than the total foreign fund infusion into the sector during the fiscal year 2020-21, which was at $1.49 billion. The FDI equity infusion during the last quarter of the financial year, ending March 2023, reported a growth of 14 per cent at $240 million as compared to the $210 million registered during the same period of previous fiscal year.

During the fiscal year 2022-23, the hospital and diagnostic centres sector reported a growth of 16.2 per cent, at $810 million fund infusion, as compared to $697 million inflow in 2021-22. The cumulative FDI equity inflow into the sector stood at $8.73 billion from April 2022 to the end of March 2023, growing from $7.92 billion reported at the end of March 2022.

The medical and surgical appliances sector has seen the FDI equity inflow almost doubling during the fiscal year 2023. The foreign investment into the sector stood at $397 million during the fiscal year, as compared to $208 million in the 12 months of previous fiscal year. The cumulative foreign investment flow from April 2000 to March 2023 in this sector stood at $2.80 billion, while till March 2022 was $2.19 billion.

It may be noted that the Economic Survey 2022-23 had said that the FDI inflow into the pharmaceutical sector increased four-fold over five years until September 2022, to $ 699 million, supported by investor-friendly policies and a positive outlook for the industry.

The cumulative FDI inflow from April 2000 to March 2023 stood at $21.46 billion, holding the eighth position among the sectors attracting the highest FDI equity inflow in the country, which is led by the services sector at $631.98 billion.

The FDI inflow into the sector has reported a significant growth while the overall FDI equity inflow to the country reported a 22 per cent decline during the fiscal year 2022-23.

The Indian pharmaceutical industry, which stands third in production by volume and 14th by value, is the producer of a whopping 60 per cent of the world’s vaccines and 20 percent of generic medicines.

It has the highest number of USFDA-compliant pharma plants outside of the USA and is home to more than 3,000 pharma companies with a network of over 10,500 manufacturing facilities. Besides, India is the source of 60,000 generic brands across 60 therapeutic categories and manufactures more than 500 different active pharmaceutical ingredients (APIs). The Centre has approved incentives worth Rs 21,940 crore ($3 billion) to improve the capabilities and capacity of the industry.

The pharma market in the country is expected to reach $65 billion by 2024 and $130 billion by 2030, with an expected growth rate of 11-12 per cent between 2020 and 2030. Certainly, the impressive growth of FDI augurs well for the pharmaceutical industry in the country.