New Delhi, March 2 (IANS) India’s active pharmaceutical ingredient (API) market, currently valued at about $15–16 billion, is projected to grow at a compound annual growth rate of 5–7 per cent in FY27 and FY28, a report said on Monday.

The report from CareEdge Ratings said the growth will be driven by favourable government policies, a structural shift toward high‑potency and complex APIs, rising domestic demand and deeper penetration into regulated and emerging markets.

Indian pharma firms are shifting from basic APIs to complex APIs to counter price erosion, strengthen margins and retain customers, the report said.

The report flagged persistent import reliance on China for key starting materials but cited optimism that government initiatives and Production‑Linked Incentive‑backed bulk drug parks begin to show progress.

“While the full impact of these measures will take time to materialise, progress is visible: more than 30 projects have been completed, many firms having inaugurated new capacities under the scheme,” the ratings agency mentioned.

Meanwhile, a pipeline of high-potent and complex APIs is being developed, with commercialisation expected in the coming years, pointing to India’s gradual move up the value chain, it noted.

Meaningful growth from this shift is expected to accrue after 2-4 years, as majority of the related projects are yet to achieve commercialisation and substantial production ramp-up, it forecasted.

“In the long run, growth is expected to stem from an ageing population, better access to healthcare, increased insurance penetration, higher chronic diseases, loss of exclusivity and expansion to other emerging markets,” said Pritesh Rathi, Assistant Director, CareEdge Ratings.

Government-backed bulk drug parks are set to shape the next phase of API investments, with nearly 80 per cent of ongoing projects linked to this initiative. Major developments include large scale facilities worth 20 billion to 40 billion in Andhra Pradesh, Himachal Pradesh, and Gujarat to strengthen domestic API manufacturing, reduce import dependence, and drive cost efficiencies across the sect

–IANS

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