The Global Health System’s Dependence on India’s Low-Cost Medicine

India’s pharmaceutical industry helps keep medicines affordable in many parts of the world. From generic drugs used in American hospitals to vaccines sent to countries with limited healthcare resources, Indian manufacturers play an important role in meeting global health needs.

This role goes beyond pharmaceutical exports. India’s ability to produce medicines in large quantities at low cost helps other countries manage the cost of healthcare. But there is a problem behind this success. India depends on imported ingredients and global markets to keep its pharmaceutical industry running.

As countries become more focused on national security and domestic production, this relationship is becoming harder to maintain. The world needs India’s affordable medicines, but India also needs the global system that allows it to produce and supply them.

India is part of the world’s health infrastructure

Global health is usually discussed in terms of institutions and services. These include disease monitoring, international health cooperation, vaccination programmes and emergency responses.

But medicines are also an important part of global health infrastructure. Their availability in one country can affect how much healthcare other countries can provide. Their value comes not only from the chemicals they contain, but also from the ability to produce them in large quantities, maintain quality, obtain the necessary inputs and deliver them across borders at affordable prices.

India has built much of this ability. It was the world’s third-largest pharmaceutical exporter by volume. Pharmaceutical exports rose from $27 billion in 2023 to $30.47 billion in FY25. Generic medicines make up a large part of India’s exports to the United States and Europe.

The U.S. Food and Drug Administration has said that India supplies about 40% of the generic drugs used in the United States. One estimate puts the savings for U.S. healthcare payers from Indian generic medicines at $219 billion in 2022.

These figures show more than a successful trade relationship. They show how a country’s ability to manufacture medicines can affect healthcare costs in other countries. When India produces medicines in large quantities at lower prices, hospitals, insurers, governments and patients elsewhere may be able to get treatment more cheaply.

That is why the phrase “pharmacy of the world” tells only part of the story. India is not simply selling medicines abroad. Its ability to produce them helps other countries manage the cost of treating their people.

The dependence runs both ways

The world’s dependence on Indian medicines does not mean India has become independent in pharmaceutical production. A tablet, capsule or injection may be made in India, while some of the ingredients needed to produce it come from other countries.

India’s pharmaceutical industry imports about $5 billion worth of inputs every year. China accounts for 72% of India’s imports of active pharmaceutical ingredients (APIs). At the same time, roughly 70% of India’s pharmaceutical exports go to the United States and Europe.

India therefore has two roles in the same production system. It supplies medicines to the world, but it also depends on imported inputs and foreign markets to keep supplying them.

This matters when countries face disruptions. A country may be very good at producing finished medicines but still face problems if an important ingredient becomes unavailable.

India’s pharmaceutical strength is therefore best understood as its place in a global production system, not as freedom from dependence on other countries.

Vaccines show why India’s role matters

Generic medicines show the size of India’s commercial role. Vaccines make its importance for public health easier to see.

The Serum Institute of India is a useful example. Its ability to produce vaccines in large quantities connects Indian industry with health needs far beyond India.

The development and delivery of vaccines can involve several countries and institutions. Scientific research, biotechnology and manufacturing may take place in different parts of the world. India’s ability to produce vaccines on a large scale helps turn this cooperation into physical doses that can reach people who need them.

This ability is especially important because producing vaccines in large quantities is not common. Vaccine diplomacy is therefore not only about building political influence. It also depends on the ability to turn scientific knowledge and international partnerships into vaccines that reach people.

The same pattern can be seen beyond traditional Western markets. India has worked on pharmaceutical cooperation with countries such as Trinidad and Tobago. The Serum Institute has also been involved in cooperation on dengue treatment for low- and middle-income countries.

India is therefore not only a supplier to wealthy markets. It also provides a manufacturing base that can support countries with fewer healthcare resources.

But global health is becoming more politically fragmented

Medicines cross borders, depend on imported inputs and need approval from regulators. Their supply chains cannot be separated from politics.

The United States’ withdrawal from the World Health Organization and the freezing of USAID funding were among the changes linked to the Trump administration’s wider move away from several forms of international cooperation.

Neither decision alone proves that medicine supplies will be disrupted immediately. The concern is what happens when institutions that support international health cooperation become less predictable, while governments become more focused on securing their own supply chains.

Countries must then think not only about where they can buy medicines at low prices, but also where the medicines are made, where their ingredients come from and what could happen if political tensions interrupt supplies.

Keeping costs low and making supply chains safer can sometimes work against each other. A system based on trade and specialisation may keep prices down. A system that makes medicines at home may give governments more direct control.

The challenge is to understand what is gained—and what may become more expensive—when countries change this balance.

Reshoring can make the system safer—and more expensive

The push to manufacture medicines at home is understandable. But moving pharmaceutical production from one country to another is not simple.

Building this capacity requires money, technology, skilled workers, strong regulatory systems and reliable access to inputs.

The United States’ pharmaceutical policy shows this tension. In September 2025, the announcement of a 100% tariff on branded and patented pharmaceutical imports was presented as a way to strengthen domestic manufacturing. Generic medicines were not included at the time.

But the announcement showed how pharmaceutical supply chains were becoming part of national industrial policy.

The U.S. Food and Drug Administration has also said that more than half of the pharmaceuticals distributed in the United States are made overseas. Its FDA PreCheck pilot and a separate pilot to give priority to generic-drug manufacturing and testing are meant to encourage production at home.

The push to bring production back is therefore happening in a healthcare system that already depends heavily on manufacturing outside the country.

This creates a difficult choice. The global system that helps India produce medicines efficiently also makes governments concerned about depending on foreign factories.

One goal is to keep the benefits of trade and specialisation. The other is to build more production capacity at home.

Moving too far towards making everything domestically can raise costs. In the pharmaceutical industry, these higher costs may eventually lead to higher medicine prices for people who can least afford them.

India’s own vulnerability sits upstream

India faces a similar problem. Its pharmaceutical industry has a large ability to produce finished medicines, but it still depends on imported active pharmaceutical ingredients.

A disruption in these inputs can affect a manufacturer even if the finished medicine is made entirely in India.

The question is how much of the production process India can bring under domestic control without making medicines much more expensive.

The Department of Pharmaceuticals’ production-linked incentive scheme for critical key starting materials, drug intermediates and APIs is one government response. The aim is to increase domestic production and reduce the points where an outside disruption could stop manufacturing.

It is not only about increasing exports of finished medicines.

India’s domestic programmes to make medicines more affordable provide another layer of support. By June 2025, the Pradhan Mantri Bhartiya Janaushadhi Pariyojana had 16,912 Jan Aushadhi Kendras. Its product list included 2,110 medicines and 315 surgical, medical consumable and device products.

Such programmes can help people get medicines at home, but they cannot remove India’s dependence on other countries.

Indian pharmaceutical production remains linked to global trade through its markets, technology, ingredients and regulatory relationships.

The deeper dependence is not on India alone

India is not an independent pharmaceutical island. Neither are the United States or Europe.

Today’s pharmaceutical system depends on different countries providing different skills and resources. India has a strong position in generic medicines and manufacturing. Other countries contribute research, biotechnology, investment, specialised ingredients, regulatory skills and markets.

Vaccines, in particular, can involve international cooperation before they are made in India and delivered to other countries.

The system works because these different abilities are connected. But this dependence can also create risks.

A country that controls an important input can become a point where supplies are blocked. A country with a large manufacturing base can become another point of dependence.

When major markets put up trade barriers in the name of security, the cost of maintaining domestic production can spread through the supply chain.

India is therefore both a beneficiary of globalisation and part of the system that makes it work.

When a low-cost generic medicine is used in large quantities, the relationship goes beyond a single export. Indian manufacturing can affect the cost and availability of treatment far beyond India’s borders.

The global health system depends on India’s ability to produce medicines, just as India depends on the global system that allows its medicines to reach other countries.

The new health-security problem

In the past, the main question about medicines was whether patients could get the treatment they needed.

The harder question now is whether the world can keep medicines affordable and available when the production networks that supply them become part of political and strategic competition.

India is close to the centre of this problem. Its generic-drug industry gives the world an important source of affordable medicines. Its vaccine capacity supports international health programmes. Its pharmaceutical partnerships give developing countries more ways to work together.

Yet India’s dependence on imported APIs shows that even a major supplier can remain vulnerable.

Global health security therefore requires more than having enough medicines. It also needs manufacturing capacity that can withstand disruption, different sources of important inputs and international connections that continue to work when political tensions rise.

India’s pharmaceutical industry provides one of these capabilities on a very large scale. But it cannot act as an unlimited safety net for the whole world.

The more health systems depend on Indian medicines, the more important it becomes to protect India’s own supply chain.

That is what makes the industry more than an export success. It is part of the world’s health infrastructure. Its strength comes from producing medicines at scale, while its vulnerability comes from the global connections that make this scale possible.