ICICI Prudential Asset Management Company has launched the ICICI Prudential Nifty Pharma ETF, an open-ended exchange-traded fund (ETF) tracking the Nifty Pharma Index, as India’s pharmaceutical industry positions itself for growth in complex generics, specialty medicines and contract manufacturing.
The latest addition to the fund house’s sectoral ETF portfolio is designed to provide investors with diversified exposure to pharmaceutical companies represented in the benchmark index. The launch comes as India’s pharmaceutical market, currently valued at around $60 billion, is projected to reach $80 billion by 2031.
However, as a sector-specific investment product, the ETF’s performance will depend on the fortunes of pharmaceutical stocks and the broader risks affecting the industry.
Indian pharma moves beyond generics
India is the world’s third-largest pharmaceutical producer and supplies around 20% of global generic medicines by volume. The country is also a major supplier of affordable HIV treatments and low-cost vaccines.
The industry comprises more than 3,000 companies, 10,500 manufacturing units and 60,000 generic brands spanning 60 therapeutic areas, according to the information provided by the fund house.
While generic medicines remain a core strength, the industry is increasingly moving towards higher-value segments, including complex generics, injectables, specialty medicines and biologics.
Global pharmaceutical companies are also outsourcing more research-intensive and manufacturing activities, including biosimilars and contract development and manufacturing organisation (CDMO) services, to Indian companies. This shift could create opportunities for domestic manufacturers to increase their participation in global pharmaceutical supply chains.
ICICI Prudential AMC, Principal – Investment Strategy, Chintan Haria said the sector was moving up the value chain as global pharmaceutical companies increasingly outsourced higher-margin activities to Indian manufacturers.
He said the ETF would provide investors with an exchange-traded route to gain diversified exposure to established pharmaceutical companies with a global presence.
Domestic demand and global outsourcing support growth
India’s domestic pharmaceutical market recorded year-on-year growth of 13.5% in June 2026, with new product launches contributing to expansion, according to the fund house’s launch communication.
Overseas demand could provide another growth driver. The loss of patent protection for several blockbuster biologic drugs during the 2024–2026 period is creating opportunities for manufacturers of biosimilars and other competing products.
Indian pharmaceutical companies with the necessary manufacturing capabilities and regulatory approvals could benefit as global drugmakers seek cost-effective development and production partners.
The CDMO segment could also gain from increasing outsourcing by multinational pharmaceutical companies. For Indian manufacturers, the opportunity extends beyond production volumes to participation in more complex and potentially higher-value pharmaceutical activities.
The extent of the benefits, however, will depend on individual companies’ manufacturing capabilities, compliance standards, product pipelines and ability to secure global contracts.
Policy support strengthens manufacturing ambitions
Government initiatives are another factor shaping the industry’s growth prospects.
The Biopharma SHAKTI programme, or Strategy for Healthcare Advancement through Knowledge, Technology and Innovation, aims to strengthen India’s biopharmaceutical ecosystem, support exports and attract investment.
Regulatory alignment with international standards, including those of the US Food and Drug Administration, the European Medicines Agency and the Pharmaceutical Inspection Co-operation Scheme, could help Indian manufacturers navigate multiple markets more efficiently.
Production-linked incentive schemes supporting domestic pharmaceutical manufacturing and active pharmaceutical ingredients are also intended to reduce import dependence and strengthen supply-chain resilience.
Reducing reliance on imported intermediates, particularly from China, could improve domestic sourcing capabilities. However, the impact on manufacturers’ margins will depend on production costs, scale, pricing and the pace at which domestic suppliers become competitive.
GLP-1 drugs emerge as another growth opportunity
The emergence of glucagon-like peptide-1 (GLP-1) drugs for obesity and diabetes is opening another potential growth avenue for pharmaceutical companies.
The loss of patent protection for semaglutide in India creates opportunities for eligible manufacturers to introduce competing products, subject to applicable regulatory requirements and intellectual property considerations.
Given the large patient populations affected by diabetes and obesity, the segment could expand the range of therapies available to Indian pharmaceutical companies.
Companies that can develop, manufacture and market these medicines competitively may benefit from the opportunity. Nevertheless, commercial success will depend on pricing, product quality, regulatory approvals, distribution and competition.