Multinational pharmaceutical companies operating in India currently face several regulatory challenges stemming from the country’s evolving healthcare policy landscape, pricing regulations, intellectual property regime, and compliance expectations. The following are the core issues:
Price Controls by NPPA
Quoting source Businessdrugcontrol.org, as of March 25, 2025, ceiling prices have been fixed for 928 scheduled formulations, with adjustments based on the Wholesale Price Index (WPI). Additionally, in May 2025, retail prices for 84 new drugs were established, covering various anti-hypertensive, anti-diabetic, and anti-inflammatory medications. While these measures aim to enhance affordability, they have raised concerns among multinational companies about profitability and long-term investment viability.
Revisions Due to Customs Duty Exemptions
Following the announcement of full customs duty exemptions on 36 life-saving drugs and a concessional 5% duty on six additional drugs, NPPA directed all pharmaceutical manufacturers and marketing companies to revise the MRP of the affected drugs to ensure that the benefits of reduced or exempted duties are passed on to consumers. Companies are required to submit revised price lists to dealers, state drug regulators, and government authorities. (Sources: "Companies need to cut down MRP of drugs given custom duty relaxations in budget: NPPA," The Economic Times, February 19, 2025. ETPharma.com
"Manufacturers Directed to Revise MRP for Drugs with Reduced or Nil Customs Duty," Pharmacy Pro, February 17, 2025 Business Standard)
OPPI (The Organisation of Pharmaceutical Producers of India) representing multinational pharmaceutical companies operating in India has requested exemptions for patented and orphan drugs from government-imposed price controls. They argue that such regulations hinder innovation and have also sought to eliminate the practice of 50% price cuts upon patent expiry. (Sources: Pharma MNCs seek relief from price control for patented drugs," The Economic Times, August 10, 2024, Medicare News)
"OPPI appeals for price control exemption on patented and orphan drugs", (The Pharma Letter, August 15, 2024)"
Foreign Ownership Regulations
The foreign ownership regulations for multinational pharmaceutical companies (MNCs) operating in India are governed by the Consolidated FDI Policy, the Foreign Exchange Management Act (FEMA), and recent regulatory developments.
India is preparing to implement more rigorous regulations for companies with foreign ownership. Proposed changes will redefine foreign-owned entities to include both direct and indirect foreign investments, categorizing them as “foreign-owned and controlled entities” (FOCE). This reclassification will subject such companies to foreign direct investment (FDI) rules, particularly those concerning share transfers and internal restructurings (Source: Reuters).
Delays in Regulatory Approvals
The pharma MNCs operating in India are encountering significant delays in regulatory approvals. These challenges stem from a combination of stringent local requirements, bureaucratic inefficiencies, and infrastructural limitations. Telegraph
The Central Drugs Standard Control Organization (CDSCO) has been engaging with industry stakeholders to identify and address regulatory challenges. Despite these efforts, pharmaceutical companies continue to experience delays in obtaining approvals for clinical trials, import licenses, and product registrations. These delays can hinder the timely introduction of new and innovative therapies into the Indian market (Source: Pharmabiz.com).
According to OPPI (The Organisation of Pharmaceutical Producers of India), launching a new drug in India can take up to four years longer than in the U.S. or EU. This delay is primarily due to India's stringent clinical trial regulations and the Central Drugs Standard Control Organisation's (CDSCO) cautious approach, which rarely permits drug launches without local clinical trials—even when the drugs are approved in other major markets.
Revised Schedule M Compliance
The revised Schedule M regulations, which outline quality standards for manufacturing practices, have presented significant compliance challenges. As the implementation deadline approaches, most pharmaceutical companies in India remain underprepared. Only around 100 out of an estimated 10,000 small and medium-sized enterprises have submitted plans to upgrade their facilities to meet the new standards (Source: Economic Times).
Updated Biosimilar Guidelines
The CDSCO has released draft guidelines for biosimilar, aiming to align India’s regulatory framework with global standards set by agencies such as the EMA and FDA. While this is a progressive move, it requires multinational companies to adapt to a more stringent and evolving regulatory environment.
Import Restrictions and API Dependency
India’s push for self-reliance in pharmaceutical manufacturing has resulted in tighter controls on the import of Active Pharmaceutical Ingredients (APIs), particularly from China. This created challenges for multinational companies that relied on global supply chains, especially during COVID 19 pandemic potentially affecting both the availability and the cost of essential medicines.
In consideration, the government launched the Production Linked Incentive (PLI) scheme in 2020, allocating ₹15,000 crore to incentivize domestic production of critical APIs, Key Starting Materials (KSMs), and Drug Intermediates (DIs)
Under this scheme, India has commenced domestic production of 38 essential APIs, including Penicillin G and Clavulanic Acid, which were previously entirely imported from China. This resulted in the setting up of 35 new Greenfield manufacturing facilities across states like Gujarat, Maharashtra, Himachal Pradesh, and Andhra Pradesh. (Source: Medgate Today, Business Standard)
India's move towards manufacturing domestic Active Pharmaceutical Ingredient (API) presents a complex picture of opportunities and challenges for multinational pharmaceutical companies. This paradigm shift is influenced by various factors, including government initiatives, global supply chain dynamics, and industry-specific hurdles.
Opportunities for MNCs
The domestic manufacturing of APIs offer MNCs an alternative to Chinese manufactured Ingredients.
The introduction of Production Linked Incentive (PLI) scheme and establishment of Bulk Drug Parks to boost domestic production of APIs are to attract investment and to promote domestic manufacturer, giving opportunities to MNCs to partner or collaborate in India’s pharma sector.
India’s cheaper labour cost and established infrastructure will be benefit MNCs with no compromise in quality.
Challenges
Yielding to the stringent environmental and regulatory requirements with regards to domestic API production, the MNCs may incur increased infrastructural investments which may lead to additional operational costs.
Dependence on import of solvents and other raw materials for the manufacturing of API, especially from China, can be a challenge in supply chain.
Dealing with new domestic manufacturers requires navigating India's regulatory landscape, which may differ from international norms.
On a concluding note, multinational pharmaceutical companies in India are navigating a complex regulatory environment marked by stringent price controls, evolving compliance norms, and heightened scrutiny of foreign ownership and marketing practices
There may be collaborations between MNCs and Indian companies’ viz., joint ventures on manufacturing, compliance, supply chain and other related areas.
(Sources for this feature taken from Medgate Today, Reuters, Business Standard, Economic Times, MDPI (Multidisciplinary Digital Publishing Institute), Nishith Desai Associates, ET Healthworld, India Pharma Outlook and other news sources).