India's Pharma Sector Must Expand AI Use Beyond R&D: Reports

The report emphasizes that absolute R&D spending remains modest and identifies expanding investment in advanced biologics and AI-driven drug discovery as the "largest opportunity" for bridging the innovation divide.

Recent reports have indicated that India’s pharma sector has not yet scaled AI and digital health capabilities beyond R&D, even as global competitors have advanced toward integrated, data-driven care models, underscoring the need for broader digital adoption to maintain competitiveness.

According to the India Future Readiness Indicator (IFRI) 2025 report, released by IMD in collaboration with Confederation of Indian Industry-CII, over the last five decades, India has transformed from a medicine-importing nation to one of the most influential generics producers in the world.

More than 60,000 generic medicines are manufactured in the country in more than 60 therapeutic segments, and its pharmaceutical products find their way to more than 200 countries.

The sector contributes 1.7% to the country's GDP and accounts for nearly 6% of the total merchandise exports, with the domestic industry valued at around $55 billion.

The report points out that India's pharmaceutical ecosystem is now entering a defining period shaped by sharper supply chain expectations, rising sustainability pressures, and a rapid global shift toward advanced biologics.

Even as Indian companies continue to expand their capabilities, the report says that innovation investment trails considerably behind global competitors.

It remarks that "leading Indian firms typically invest 5-8% of revenue in research, which is still far below global giants whose multi-modality R&D pipelines span GLP-1s, ADCs, and cell and gene therapies."

Moreover, the report emphasizes that absolute R&D spending remains modest and identifies expanding investment in advanced biologics and AI-driven drug discovery as the "largest opportunity" for bridging the innovation divide.

While artificial intelligence has been deeply embedded across pharmaceutical operations, from drug discovery to manufacturing worldwide, Indian firms remain at a trial-level stage.

As the report adds, the current adoption of AI is limited to selective pockets like formulation development or quality analytics and far from the enterprise-wide digital transformation underway at its international rivals.

The report underscores that for Indian companies to win competitiveness, it will be essential to scale AI use beyond R&D in a market increasingly structured around advanced digital tools and integrated care solutions.

Globally, large pharmaceutical companies are fast moving away from a standalone therapeutic business model to a connected health ecosystem that combines medicines with diagnostics, monitoring technologies, digital apps, and data services, the report notes.

Giving examples of digital inhalers, glucose monitoring platforms, and patient-coaching applications, the report says this integrated approach is fast becoming central to their future competitiveness.

Indian companies, however, remain largely product-centric, though the report does mention that they now have a clear opportunity to partner with medtech and digital health innovators to develop outcome-focused and technology-enabled models.

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