Policy Update
Ritobrata Purkayastha
Background
The launch of the Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology, and Innovation) scheme in the Union Budget 2026–27 marks a decisive structural pivot in India’s health-industrial policy. Backed by an outlay of ₹10,000 crore over five years , the initiative seeks to upgrade India’s pharmaceutical manufacturing base to resolve a long-standing volume-value paradox. India is the third-largest pharmaceutical producer globally by volume but eleventh by value, driven by its historical reliance on low-margin chemical generics. Biopharma SHAKTI aims to transform India into a leading biomanufacturing hub and capture 5% of the global biopharmaceutical market share.
This policy shift is driven by a domestic epidemiological transition and rising trade barriers. Non-communicable diseases (NCDs) like cancer, diabetes, and autoimmune disorders now account for nearly 57% to 63% of all deaths in India. Concurrently, proposed US tariffs of 10% to 250% on generic and branded medicines threaten to render traditional generic exports unviable. Biopharma SHAKTI addresses these headwinds by incentivizing domestic biological development and the adoption of Non-Animal Methodologies (NAMs)—such as organoids, 3D bioprinting, and organ-on-a-chip technologies—to improve drug safety screening accuracy and compress development timelines. The scheme acts as a coordinated national push alongside the PRIP scheme, the BioE3 Policy, and the Bio-RIDE initiative.
| Characteristic Profile | Chemical Generics | Biologics and Biosimilars |
| Active Substance | Small, simple, chemically synthesized molecules. | Complex, large 3D macromolecular structures from living systems. |
| Manufacturing Cost | Low, typically representing 5% to 10% of revenues. | High, typically representing 30% to 50% of revenues. |
| Regulatory Pathway | Standardized bioequivalence; low preclinical complexity. | Extensive characterization, immunogenicity, and comparability. |
| Safety Testing | Conventional animal models and simplified in vitro assays. | Non-Animal Methodologies (NAMs) such as organoids. |
| Tariff Vulnerability | Extreme; generics face unviability under proposed US tariffs. | High pricing power and durable IP, mitigating tariff shocks. |
Functioning
The Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers administers the Biopharma SHAKTI scheme. The program operationalizes its ₹10,000 crore outlay across seven integrated pillars :
- Early-Stage Capital Support: De-risking basic and translational research through the Discovery Grant Fund and Discovery & Development Equity Fund.
- Human Capital Pipeline: Establishing 3 new National Institutes of Pharmaceutical Education and Research (NIPERs) and upgrading 7 existing ones.
- Clinical Trial Network: Expanding trial infrastructure through a nationally accredited network of 1,000 clinical trial sites under ICMR.
- Upstream API Production: Incentivizing fermentation-based bulk drugs and basic biological building blocks.
- Logistics & Packaging: Supporting domestic biopharma delivery devices and sterile containment packaging.
- Biomanufacturing Scale-up: Providing fiscal incentives for emerging biosimilar and biological manufacturing lines.
- Regulatory Modernization: Underwriting CDSCO capacity building, forming a dedicated Scientific Review Cadre to align approvals with global benchmarks.
Eligible applicants include private biopharmaceutical firms, registered startups, MSMEs, and collaborating academic research institutions. The application roadmap requires entities to secure Udyam and Startup India registrations, prepare a Detailed Project Report (DPR) focused on process validation and financial milestones, and submit proposals through the designated portal for technical scoring and phased disbursement.
| Operational Pillar | Primary Objective | Key Implementation Mechanism |
| Capital Support | De-risking basic and translational research. | Discovery Grant and Equity Funds. |
| Human Capital | Generating specialized bioprocess experts. | Upgrading 7 NIPERs and establishing 3 new ones. |
| Clinical Trial | Expanding clinical trial infrastructure. | Creating 1,000 ICMR-accredited sites. |
| Upstream API | Securing domestic bulk drug production. | Production-linked fiscal incentives for building blocks. |
| Logistics | Building sterile containment systems. | Support for biopharma packaging and medical device parks. |
| Manufacturing | Accelerating commercial biosimilar scaling. | Targeted incentives and shared infrastructure. |
| Regulatory | Aligning approval timelines globally. | CDSCO Scientific Review Cadre. |
Performance
The capital absorption capacity and structure of Biopharma SHAKTI are modeled on the National Biopharma Mission (NBM). Launched in May 2017 with an outlay of ₹1,500 crore (co-funded 50% through a $125 million World Bank loan) under the “Innovate in India” (i3) project , NBM built the primary layers of India’s health-innovation ecosystem. NBM supported 101 major projects across 150 organizations and 30 MSMEs while generating over 1,000 specialized scientific jobs.
Major achievements of NBM include: supporting the clinical development of ZyCoV-D (the world’s first DNA-based COVID-19 vaccine) ; clinical testing of Lirafit (India’s first domestic liraglutide biosimilar, reducing patient diabetes care costs by 65%) ; and a collaboration between IIT Bombay and Tata Memorial Centre to develop a CD19-CAR-T cell therapy, which reduced leukemia treatment costs to $30,000 per infusion compared to $373,000 to $475,000 overseas. NBM built 18 shared national research facilities and a clinical trial network with a database of 8 lakh volunteers. These actions helped expand India’s bioeconomy to $165.7 billion by 2024, with BioPharma representing 35% ($58 billion).
| Policy Initiative | Allocation | Focus Area | Key Accomplishments |
| NBM | ₹1,500 crore. | Infrastructure, startup de-risking, and shared validation. | Supported 101 projects; built 18 shared facilities. |
| PRIP (2023) | ₹5,000 crore. | Driving R&D in biosimilars and high-complexity medtech. | Established Centres of Excellence at NIPERs. |
| BioE3 (2024) | Framework. | Biomanufacturing, Bio-AI hubs, and biofoundries. | Supported precision biotherapeutics and smart proteins. |
| Bio-RIDE | ₹9,197 crore. | Merging R&D, entrepreneurship, and biomanufacturing. | Accelerated early-stage biofoundry scaling. |
Impact
Biopharma SHAKTI shifts the focus of domestic pharmaceutical production from simple generic compounding to biological process-scale validation. This is evident in high-complexity injectable APIs like parenteral-grade complex iron substances (e.g., ferric derisomaltose oligosaccharides). Stabilizing critical reaction parameters during production scale-up is vital to prevent molecular drift and maintain impurities within limits. Achieving this operational control enables Indian manufacturers to build proprietary process IP, secure higher pricing power, and de-risk global procurement.
On a macro level, the scheme has delivered a strong positive signaling effect to capital markets, prompting immediate stock gains for players like Biocon and Piramal Pharma. Scaled domestic biosimilars will lower out-of-pocket spending on chronic care and decrease dependence on imported biologics. Standardizing NAMs like organ-on-a-chip technologies simulates human biological responses more accurately than animal models, screening out unviable candidates early and conserving development capital.
Emerging Issues
Despite its strong architecture, several systemic bottlenecks and financial rigidities limit capital absorption within the domestic biopharmaceutical sector:
- Low GERD Intensity: India’s Gross Expenditure on Research and Development (GERD) remains stagnant at 0.6% to 0.7% of GDP, far below China (2.6%), the US (3.4%), and South Korea (5.3%). Fragmented funding across DST, CSIR, and ANRF leads to duplicated efforts and low grant approval rates (under 10%).
- High Capex & Capital Skew: Building clinical-grade biomanufacturing facilities requires highly specialized equipment, costing upwards of $30 million upfront. During production scaling, advanced manufacturers typically absorb 5% to 10% of annual revenues as working capital. Early physical expansion risks an ROIC compression of 300 to 500 basis points. Private venture capital is heavily concentrated, with the 6 largest GPs capturing 64% of $13.68 billion in domestic PE/VC funding.
- Administrative Procedural Delays: Grant disbursal lags of 3 to 6 months and rigid Treasury Single Account (TSA) regulations interrupt experiment continuity.
- Supply & Skills Deficit: India possesses only 262 FTE researchers per million population (compared to China’s 1,585), driving a brain drain. Upstream dependence on China for 70% to 80% of APIs and KSMs exposes manufacturing to trade vulnerabilities and pricing shocks.
| Systemic Barrier | Metric Profile | Capital and Operational Consequence |
| R&D Underfunding | GERD at 0.6% to 0.7% of GDP. | Restricts long-term translational drug discovery. |
| High Capex | Biomanufacturing plant costs > $30 million. | Bars MSMEs and startups from clinical production scaling. |
| Working Capital Risk | 5% to 10% scale-up revenue absorption. | Risks ROIC compression of 300 to 500 bps under low asset use. |
| Grant Delays | 3 to 6 month approval-to-disbursal lag. | Halts research continuity and project stability. |
| VC Concentration | 6 GPs capture 64% of PE/VC funding. | Deprives early-stage biotech startups of vital growth capital. |
| Talent Deficit | 262 FTE researchers per million population. | Drives brain drain of skilled bioprocess engineers abroad. |
| Supply Chain Choke | 70% to 80% import dependency on China. | Exposes manufacturing to geopolitical and pricing shocks. |
Way Forward
To maximize Biopharma SHAKTI’s impact, several coordinated reforms must be implemented:
- Governance & R&D Reform: Implement NITI Aayog’s ROPE framework to transition to outcome-linked, roll-over funding, while aiming to increase GERD to 2% of GDP. Automating grant disbursement must compress approval-to-fund timelines to under six months.
- Public-Private De-risking: Deploy structured public-private partnerships (PPPs) and co-investment models (leveraging BIRAC’s SEED, LEAP, and BIG funds) to de-risk startups navigating high-risk preclinical stages.
- Specialized Human Capital: Establish hands-on curriculums in cell line development, molecular characterization, and QbD across the NIPER network to retain engineering and regulatory talent.
- Supply Chain Upgrades: Accelerate the development of the three bulk drug parks in Gujarat, Andhra Pradesh, and Himachal Pradesh. Ensure subsidized, continuous utilities to support domestic biological fermentation and decrease import reliance.
- Regulatory Fast-Tracking: Strengthen the CDSCO’s Scientific Review Cadre to speed up evaluations of complex biological therapies. Standardizing NAM safety assessments will compress clinical validation timelines and optimize drug discovery.
References
- Press Information Bureau. (2026). Biopharma SHAKTI Proposed in the Union Budget 2026-27 to Position India as a Global Biomanufacturing Hub. Ministry of Finance, Government of India. pib.gov.in
- Department of Pharmaceuticals. (2026). Biopharma SHAKTI Scheme: Implementation Guidelines and Strategic Framework. Ministry of Chemicals and Fertilizers, Government of India. pharma-dept.gov.in
- Ministry of Chemicals and Fertilizers. (2026). Starred Question No. 419: Allocation and Distribution of Funds under Biopharma Shakti Scheme. Lok Sabha, Parliament of India. sansad.in
- NITI Aayog. (2026). Ease of Doing Research & Development in India: Challenges, Reforms, and Path Forward. Government of India. niti.gov.in
- World Bank Group. (2025). India’s Biopharma Leap: The World Bank-Backed National Biopharma Mission is Transforming Health Innovation. World Bank Feature Story. worldbank.org
- Biotechnology Industry Research Assistance Council (BIRAC). (2026). National Biopharma Mission (NBM): Driving Affordable Healthcare and Startup Innovation. Department of Biotechnology, Government of India. birac.nic.in
- Department of Pharmaceuticals. (2025). Amended Guidelines for the Promotion of Research and Innovation in Pharma-MedTech (PRIP) Scheme. Ministry of Chemicals and Fertilizers, Government of India. pharma-dept.gov.in
- McKinsey & Company. (2025). India’s Private Markets: The Global Limited Partner View. McKinsey Private Capital. mckinsey.com
- Thaker, N. (2026). Budget 2026: Rs 10,000 Crore Biopharma Shakti Push to Make India a Biologics Hub. Forbes India. forbesindia.com
- West Bengal Chemical Industries Limited (WBCIL). (2026). The Impact of Biopharma SHAKTI on Advanced API Manufacturing in India. WBCIL Blog. wbcil.com
- DrugPatentWatch. (2026). Balancing Opportunity and Risk in India’s Pharmaceutical Sector: The Pivot to Biologics. DrugPatentWatch. drugpatentwatch.com
- Indian Council of Medical Research (ICMR). (2025). National Guidelines on Non-Animal Methodologies (NAMs) for Drug Safety Evaluation. Ministry of Health and Family Welfare, Government of India. icmr.gov.in
- Global Burden of Disease Study. (2025). India Disease Burden and Mortality Estimates (2023-2025). Institute for Health Metrics and Evaluation (IHME). healthdata.org
- Comptroller and Auditor General of India. (2025). Compliance Audit Report on the Subject-Specific Audit of the National Biopharma Mission (Report No. 29 of 2025). Union Government. cag.gov.in
About the Contributor
Ritobrata Purkayastha is a Research & Editorial Intern at the IMPRI Impact and Policy Research Institute, New Delhi. He is currently pursuing a Bachelor of Science (B.Sc.) in Economics (3rd Year) at XIM University, Bhubaneswar. His research interests encompass monetary econometrics, public policy, and the application of data science and quantitative econometric tools to socio-economic challenges.
Acknowledgements
The author sincerely expresses gratitude to the reviewers Kavin Adithya and Ameya Satnam for their valuable comments, constructive suggestions, and continuous guidance throughout the preparation of this article. Their insightful feedback significantly enhanced the clarity, organisation, and analytical quality of the manuscript. The author also acknowledges the support and encouragement received during the research and writing process, which contributed to the successful completion of this work.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organisation.
