From Cost Efficiency to Supply Certainty: How the Global Bulk Drugs Industry Is Being Rewritten
By R. K. Agrawal, Managing Director, Nakoda Chemicals Ltd.
For much of the past two decades, the global bulk drugs industry operated on a simple assumption: scale and cost efficiency would always trump everything else. That assumption no longer holds.
The period since 2020 has quietly but decisively altered how governments, regulators and pharmaceutical buyers assess risk in API and intermediate supply chains. The shift is not ideological; it is empirical. Repeated disruptions, from pandemics and freight shocks to energy volatility and geopolitical fragmentation, have exposed a structural fragility that price alone could no longer compensate for.
What we are witnessing is not the end of globalisation in bulk drugs, but its recalibration.
How the industry has evolved
The earlier phase of global API manufacturing was shaped by consolidation and concentration. Economies of scale delivered affordability, but also created dependencies, particularly upstream, in key starting materials and intermediates. For years, these dependencies were tolerated because they were efficient.
The recent cycle of shortages changed that tolerance. Regulators in major markets began treating supply continuity as a public-interest issue rather than a commercial inconvenience. Buyers, meanwhile, started widening their definition of supplier risk, beyond quality and pricing, to include resilience, traceability, environmental compliance and operational depth.
In effect, the industry moved from asking “Who can supply?” to “Who can keep supplying under stress?”
What 2026 is likely to bring
By 2026, four structural trends will shape the sector.
First, strategic diversification will replace blanket reshoring. While the US and Europe are investing in domestic capacity for critical medicines, economics will still favour global sourcing for most products. The outcome is likely to be a layered model: selective domestic production for high-risk categories, supported by diversified international suppliers elsewhere.
Second, resilience will command a premium, but only for those who can prove it. Buyers may be willing to pay modestly more for suppliers with redundant utilities, robust EHS systems, stable upstream sourcing and consistent regulatory performance. However, assertions will no longer suffice; documentation, audits and track records will.
Third, sustainability will become commercially non-negotiable. Environmental performance, solvent recovery, wastewater management and energy intensity are increasingly embedded into procurement decisions, even when local regulations lag global expectations. Compliance gaps will translate into lost contracts, not just regulatory notices.
Finally, value will shift upward in the chemistry stack. Commodity APIs will remain intensely competitive. Growth opportunities will increasingly lie in complex intermediates, custom synthesis, process optimisation and long-term technical partnerships, areas where execution discipline matters more than sheer scale.
How Indian companies must adapt
India remains structurally well-positioned. Its chemistry talent, regulatory experience and manufacturing depth are real advantages. But converting these strengths into sustained relevance will require a change in mindset.
Compliance must be treated as a capability, not a function. Data integrity, investigation quality, change management and inspection readiness are now part of the commercial proposition. In a risk-conscious supply chain, the cost of regulatory disruption far outweighs any price advantage.
Supply-chain vulnerability must be addressed selectively but decisively. Not every firm needs full backward integration, but every firm must understand where its real dependencies lie and mitigate them through integration, long-term contracts or credible partnerships.
Policy support should be leveraged, not relied upon. Incentive frameworks can accelerate capacity creation, but global competitiveness is ultimately built on operational excellence, cost discipline and customer trust.
Perhaps most importantly, Indian manufacturers must move from selling molecules to solving problems. Global customers increasingly value partners who can support route optimisation, impurity control, scale-up speed and lifecycle management. This is where mid-sized Indian firms can differentiate without chasing unsustainable scale.
The quiet advantage of reliability
The next phase of the bulk drugs industry will not be defined by dramatic announcements or oversized capacity bets. It will be shaped by quieter attributes: disciplined plants, resilient systems, predictable compliance and transparent risk management.
In 2026, the most valuable suppliers will not necessarily be the largest or the cheapest. They will be the ones that make reliability visible and risk measurable.
That is where the industry is headed. And that is where Indian bulk drug companies must choose to compete.
