Indian pharmaceutical exports to China are contracting. In FY26, shipments to China fell by 11.54 percent, dropping from $324.91 million in FY25 to $287.42 million.

The China slide comes even as India’s pharmaceutical exports grew 2 percent to $31 billion in the year gone by.

Indian drugmakers failed to make a dent in the world’s second-largest pharmaceutical market, which was valued at $86.3 billion in 2025. The market is expected to expand at a compound annual growth rate of 7.8 percent to $156.7 billion by 2033, according to market research firm Grand View Research Horizon.

China ranks 24th on India’s list of pharmaceutical export markets.

This sharp double-digit decline flags China as a "country of concern" for Indian exporters. The primary friction point stems from non-tariff barriers, rigid regulatory approvals, steep price competition from local manufacturers and Beijing's preference for domestic procurement.

Industry insiders told Moneycontrol that China’s domestic healthcare landscape heavily favours local manufacturers, making it increasingly difficult for Indian formulations to clear regulatory hurdles.

"China's drug approval process is slow; it's been like that," said the head of a pharma industry body, who didn't want to be named.

"Maybe from FY27, those export numbers would look different, due to Sun Pharma's acquisition of Organon, which derives about $1 billion revenues from China alone."

Major Indian drugmakers such as Sun Pharma, Dr Reddy's and Cipla have made efforts to crack the Chinese market. Dr Reddy's and Cipla even won bids to supply generics to public hospitals in China. The optimism, however, faded quickly as aggressive cost undercutting by Chinese manufacturers and India's heavy dependency on raw materials from China priced them out of the market.

While exports shrank, India's reliance on China for pharmaceuticals remains huge. China continues to be India’s top source country for pharma imports by a wide margin, accounting for a staggering 38.09 percent of total imports in FY25, DGCIS data shows.

While imports from China contracted by 3.43 percent — from $3.8 billion in FY25 to $3.7 billion in FY26 — the sheer volume highlights that India's pharma infrastructure remains heavily dependent on Chinese supply chains.

Much of the imports are bulk drugs and intermediates, the raw materials that go into the making of finished dosages.

Bulk drug imports account for a massive 46.54 percent share of India's total pharmaceutical imports, valued at $4.5 billion. Though overall imports in this raw material segment saw a slight reduction of 3.26 percent, China continues to be the dominant supplier of these critical active ingredients required to make finished medicines.

How to improve exports?

Indian companies to expand their presence in the Chinese market through greater engagement and collaboration, Pharmexcil chairman Namit Joshi has said.

The Pharmaceuticals Export Promotion Council of India, which works under the commerce ministry, aims to promote and support the export of Indian pharma products.

Indian finished dosage formulations (FDFs) manufacturers should explore a reverse trade arrangement through the government.

As part of the arrangement, every API import from China could be tied to Beijing procuring FDFs from India, equivalent to 25 percent to 50 percent of the imported API volume, he said.

Continued regulatory cooperation, stronger industry-to-industry engagement and predictable market access mechanisms can further strengthen pharma trade, he said.