Rise of India's Drug Industry

Many years ago, India’s pharmaceutical industry was suffering from number of international trade limits due to their violation of intellectual property rights. The Indian companies used to copy patents of drugs made by Western countries and Japan with no responsibility to property rights. This would discourage international investors from investing into India’s drug industry. India was only good for making generic brand drugs because the patents for those drugs were already expired. However, the situation has changed dramatically in recent years due to the rising demand for international trade. Especially, with the induction of India into WTO in 2005, there came the appreciation and protection for property rights. India stopped making those counterfeit drugs. The fact that India is a member of WTO has eased the path for foreign investors to start investing into India’s many industries including drug industry. Due to flow of investments and Western cooperation, India’s pharmaceutical industry has seen unprecedented growth since 2005. According to the case, by 2011, the industry reached $11.5 billion.
There are number of factors that have contributed towards this phenomenal growth in the drug industry. The initial event that initiated the growth was India’s agreement with WTO which gave protection to intellectual property rights and assurance to international investors. Also, there are several internal factors within India which have successfully contributed to the growth of the industry. Similar to China, India has comparative advantage in manufacturing and packaging which encouraged Western companies to outsource in India. The comparative advantage has been gained due to abundance of educated work force, low wage rates and the wide spread use of English as a business language. This latter factor, the wide use of English language is one of the main reasons why Western companies chose India over China. For foreign investors, it is much easier to conduct business