The core strength of Indian pharmaceutical industry today is its huge export potential. The industry is making adequate returns from the domestic sales but bulk of its profits come from the export of generics and active pharmaceutical ingredients to the developed markets. The industry has been exporting more than half of its total production which is estimated to be more than 20 billion dollars currently. In 2010, India exported $10.3 billion worth of pharmaceutical products, registering 17.5% growth over 2009. By March 2012, pharmaceutical exports from the country have touched a growth of 20%. The largest export destination continues to be the US, followed by the UK, Germany, South Africa, and Russia. Segment wise, generic drugs account for 58% of total exports, APIs account for 40% and traditional medicines account for the remaining 2%. Many pharmaceutical firms have already established themselves as leading API manufacturers and generic players in the US and European markets. Indian firms have, thus, made their presence felt in developed markets and continue to maintain the quality of its APIs and generic formulations. The country’s commerce ministry has set an ambitious export target of $25 billion by 2013–2014.  

Now, what is worrying the Indian pharmaceutical industry is how to keep up the tempo of export growth and  achieve the target set in the context of the newly emerging hurdles. First of all, competition from China both in bulk drugs and generic products is a reality facing Indian companies in the developed markets. Some years ago, Indian APIs and generics were considered to be far superior in quality than Chinese products. That is not the case now with substantial improvement in their product quality. Secondly, several multinational drug companies are getting into the manufacture of generic drugs on  a big scale realizing the rising demand for generics world over. For the multinationals, entry into generic manufacturing has become, perhaps, the only hope for survival as several of their blockbusters are losing patent protection in the current year or next year. Now, in view of this changing market environment, generic makers of the US are putting pressure on the US government to somehow curb the imports of cheaper generic drugs. The recent move by US FDA to introduce a Generic Drug User Fee Act (GDUFA) to curb import of  generic drugs into that country is one such strong signal. The proposed Act empowers the US government to fix an exorbitant fee on the import of each generic product category coming from any overseas sources. The US currently imports about 80% of APIs and 40% of generics from various overseas locations. Imposition of such a fee on imports could either force the Indian companies to cut their  profits drastically or make the prices  uncompetitive. That would mean a period of  slow  growth in pharmaceuticals export from India could set in very soon.