More than a supply chain issue and missing the first mover status, Semaglutide episode has rather exposed systemic chinks and could prove costly for India’s pharmaceutical industry, which supplies about 20% of the world’s generic medicines by volume.
With the expiry of Novo Nordisk’s primary patent in India this March, Semaglutide — the active ingredient in the Danish company’s diabetes and anti-obesity drugs Ozempic and Wegovy — emerged as one of the most commercially significant pharmaceutical molecules in the world, potentially creating a multi-billion-dollar opportunity for the Indian drug-making industry, which is the world’s third largest by volume and 11th largest by value.
Reflecting significant interest from the domestic pharmaceuticals industry in developing their own generic version, more than 40 Indian firms have reportedly announced plans to launch their lower-cost products.
Sun Pharma, Mankind Pharma, Dr. Reddy’s, Zydus, Lupin and Alkem are among the local manufacturers that outlined plans to launch generic versions of Semaglutide in India, which has an estimated more than 10 crore adults living with diabetes, the second-highest number globally after China.
Growth from expiries
Indian drug manufacturers also hope to cash in on the markets of Brazil, Canada, China, South Africa and Turkey, where the patent expiry is imminent.
These five countries, which together account for pharmaceutical spending exceeding $350 billion annually, constitute a major catalyst representing a significant new avenue for export-led growth for complex products like semaglutide, biosimilars and specialty generics, according to IQVIA, which utilizes big data and artificial intelligence to help biotech and pharmaceutical companies accelerate drug development.
Patent expiries have historically fuelled growth of India’s pharmaceutical industry. Following patent expiry of atorvastatin (Lipitor), developed by Pfizer, in 2011; Indian firms rapidly entered the market with lower-cost generic versions to lower bad cholesterol and tryglycerides, enhancing their foothold in regulated markets such as the U.S. and Europe.
The expiry of patents on clopidogrel (Plavix), an antiplatelet medicine marketed by Sanofi and Bristol Myers Squibb, in 2012 created major opportunity for Indian firms to quickly introduce affordable alternatives that became widely used in cardiovascular care.
When sildenafil (Viagra) lost patent protection in 2012, several Indian manufacturers entered the fray.
The patent dispute around imatinib, developed by Novartis, became a landmark case in India’s pharmaceutical history. The Supreme Court’s verdict in 2013 allowed Indian firms to continue producing affordable generic versions for leukemia patients, reducing annual treatment costs from over $25,000 to a small fraction of it.
The primary base patents for sofosbuvir expired in 2025, even as Gilead Sciences granted voluntary licences to several Indian companies to manufacture generic versions to treat chronic Hepatitis C virus (HCV) infections.
Indian drug makers have converted the loss of patent exclusivity into opportunities for export expansion, lower medicine prices and greater access to healthcare.
Industry estimates suggest that competition from generic manufacturers could substantially reduce the treatment costs by more than 65% over time due to zero patent premiums rather than cheaper manufacturing, while still leaving sustainable profit margins for efficient drug makers.
If Indian pharmaceutical companies can deliver high-quality peptide medicines, they can make greater inroads into the emerging markets before the U.S. and Europe could see patent expiry in the early 2030s.
The government’s production-linked incentive — a ₹15,000 crore outlay to boost domestic manufacturing of high-value medicines, complex generics, and active pharmaceutical ingredients (APIs) — has also been advantageous for the domestic firms.
Reputation risks
Quality failures carry an economic cost far exceeding the value of the affected product itself and India cannot afford to remain mute as stakes are high with it contributing significantly to ensuring affordable medicines globally by supplying over 50% of Africa’s requirement for generics, about 40% of generic demand in the U.S., and approximately 25% of all medicine in the UK.
The latest incident, which however began as an internal issue, could have compounded India’s reputation risks. The recent quality-related setbacks not only could attract global scrutiny but also make a dent on the optimism of Indian generic drug makers, at least in the short run.
India’s largest generic player in this segment, Dr. Reddy’s Laboratories, recently suspended supplies of its generic semaglutide, a complex peptide concoction made through sophisticated biotechnological processes, after its internal inspection detected impurities in the API during production scale-up, amid New Delhi’s mission of ‘Make in India’ in critical APIs.
Supply of new injectable batches could be expected by late October or early November. The pecuniary loss from delayed sales may be temporary but damage to investor sentiment and export credibility can persist for years. This vulnerability is a matter of concern as there are about 500 API manufacturers, accounting for nearly 8% of the global API industry.
The estimated size of API market in India in 2025 was about ₹1,31,700 crore catering to domestic as well as export requirements of formulations.
India has always had the historical advantage of low-cost and high-volume generic manufacturer, but that is not a sufficient condition for the next-generation therapies. Consistent manufacturing quality is as important as cost competitiveness.
Impurity-related fiasco not only interrupts local supplies but also affect exports, contract manufacturing arrangements and partner firms relying on the same supply chain.
Indian pharma firms have periodically faced regulatory actions from global agencies such as the U.S. Food and Drug Administration, the European Medicines Agency, the UK Medicines and Healthcare products Regulatory Agency, and the World Health Organization.
These cases have generally pertained to good manufacturing practice violations, data integrity issues, contamination, inadequate quality controls, or failure to comply with manufacturing standards, rather than concerns on the efficacy of the medicines.
More than two years ago, cough syrup imported from India had resulted in death of 66 children in Gambia. The U.S. had reported several eye drop-related fatalities and severe injuries due to contaminated product made by Global Pharma Healthcare in India.
Such incidents have attracted significant global attention because they could delay India’s entry into one of the fastest-growing segments of the global generic pharmaceutical industry. Global regulatory scrutiny is expected to intensify as agencies increasingly focus on manufacturing practices rather than simply bioequivalence.
The reputation risks (from semaglutide issues) had briefly translated into diminishing value of the pharmaceutical sector as brokerages axed earnings estimates and price targets, reflecting concerns over delayed revenues and lost competitive advantage.
Redefining landscape
More than a temporary production disruption, which according to reports could well extend until October 2026; it marks a transition in India’s pharma industry from competing primarily on low-cost manufacturing to competing on technological sophistication, process reliability and quality compliance at global standards.
In what could redefine India’s pharmaceutical industry, the semaglutide issue tests the country’s ability to compete in the complex peptide therapeutics as the previous successes (from patent expiries) largely involved small-molecule drugs, whose manufacturing processes were comparatively straightforward.
Scaling up production of peptide-based drugs without compromising quality remains a major technical challenge. Consequently, success in this market depends not merely on patent expiry but on manufacturing excellence and regulatory compliance because regulatory credibility is a strategic asset.
