Niti Aayog Wants Pharma Companies To Ramp Up R&D Spend

Hyderabad: Niti Aayog has cautioned that weaknesses in India’s R&D ecosystem and regulatory bottlenecks could limit the country’s transition from a global generics leader to a major player in high-value pharmaceutical segments such as biologics, biosimilars, vaccines and advanced therapies.

Niti Aayog’s latest ‘Trade Watch’ report found that India’s pharmaceutical exports remain concentrated in volume-based generic formulations and retail medicaments, while participation in rapidly growing biologics and advanced-therapy markets is limited.

High capital expenditure requirements for bio-manufacturing, long gestation periods for drug development and comparatively low R&D investment by Indian firms were cited as key impediments. The report noted that Indian companies invest roughly seven per cent of net sales in research and development (R&D) versus 15–20 per cent among global peers, and that drug development typically takes 10-15 years.

The Niti Aayog report highlighted several structural constraints that discourage innovation and long-term investment. Repeated pre-grant oppositions and unclear timelines for their disposal delay patent grants, creating uncertainty for innovators. Limited technology transfer and weak industry–academia linkages reduce the commercialisation of public research.

The agency also flags heavy dependence on imports, particularly fermentation-based APIs and key intermediates from China, despite domestic API capacity and the Production Linked Incentive (PLI) scheme aimed at scaling local production.

Regulatory and trade frictions further hinder market access. The ‘Trade Watch’ report pointed to non-tariff barriers in export destinations, lengthy product registration, duplicative inspections, onerous documentation and limited reliance on approvals from stringent regulators, which disproportionately affect MSME exporters.

Environmental compliance costs had risen with stricter CPCB norms, zero liquid discharge requirements and effluent-treatment obligations, increasing costs, with effluent management estimated to account for a significant share of R&D expenses, the report stated.

To bridge the gap, Niti Aayog recommended promoting diversification into biologics through long-term policy support, strengthening innovation via incentives and public–private partnerships, and instituting time-bound patent opposition processes to improve IP predictability.

The report stated that India’s scale and manufacturing strengths provide a solid base, but decisive policy action and coordinated investment will be essential for the country to capture a larger share of the high-value global pharmaceutical market.