Novartis AG’s move to exit its small Indian subsidiary once again highlights the limited appetite of global pharmaceutical giants to expand their footprint in India. The decision runs counter to expectations that recent trade agreements particularly the pact between India and the European Free Trade Association (EFTA) would encourage innovator drugmakers to scale up operations in the country.
The India-EFTA free trade agreement had raised hopes among multinational pharma companies due to references to “data exclusivity.” Commerce and Industry Minister Piyush Goyal had earlier suggested that adopting data exclusivity norms could help India attract investments worth up to $150 billion. In line with this, the Central Drugs Standard Control Organisation (CDSCO) recently proposed that early applicants seeking approval for new drugs in the branded generics segment must submit their own clinical trial data instead of relying on originator dossiers.
Shrinking Presence of MNCs
Despite these signals, multinational companies continue to find India a challenging market. According to industry experts, once patented drugs lose exclusivity, domestic firms introduce more affordable branded generics, sharply reducing revenues and profitability for global companies.
Over the past few years, Novartis has streamlined its India portfolio to concentrate on innovative therapies in cardiovascular, renal, neuroscience, and oncology segments. Beginning January 2026, it granted a perpetual license to Cipla to manufacture and market its Galvus brand and combination products in India. Earlier, Dr. Reddy’s Laboratories received exclusive rights to promote and distribute Novartis’ Voveran range, calcium portfolio, and Methergine in the country.
India’s regulatory framework also limits “evergreening” the strategy of extending patent monopolies through minor modifications. The country’s Patents Act contains key safeguards such as Section 3(d) and compulsory licensing provisions that are compliant with global trade norms under the World Trade Organization (WTO) agreement on intellectual property.
Intellectual Property Roadblocks
Section 3(d) allows patents on modified versions of known drugs only if they demonstrate significantly improved therapeutic efficacy. Policymakers argue that the clause blocks unjustified repeat patents without hindering genuine innovation.
In a recent development, the Indian Patent Office revoked a patent held by Novartis for Vymada, a heart failure drug, citing lack of novelty and insufficient proof of enhanced efficacy. Such rulings reinforce India’s strict stance on patent protection.
Industry observers note that these regulations enable domestic manufacturers to offer similar medicines at a fraction often one-fifth or one-tenth of the original price. As a result, patented medicines account for only around 5% of the overall Indian pharma market.
Currently, about 30 multinational pharma companies operate in India, together holding roughly 14% market share as of December 2025. For most foreign drugmakers, India contributes less than 1% of global revenues. Analysts say the recent stake sale reflects limited interest in sustaining a branded generics business, especially after Novartis spun off its global generics arm, Sandoz.
Critics of the government’s trade policy argue that recent FTAs had promised fresh investments from EFTA countries and the UK, but developments such as Novartis’ exit suggest otherwise.
Continued R&D Footprint
Importantly, Novartis will maintain its presence in India through Novartis Healthcare Pvt Ltd, its wholly owned subsidiary. The company continues to operate its corporate centre in Hyderabad and manages over 300 clinical trial sites nationwide to advance innovative treatments.
Experts point out that multinational firms that adapt to India’s unique market dynamics and consistently introduce innovative therapies can still succeed. Meanwhile, domestic pharmaceutical companies many compliant with stringent US FDA standards have strengthened manufacturing capabilities, giving Indian patients access to high-quality, affordable medicines.
In recent years, investments have also flowed into backend research and analytics functions. With the growing use of artificial intelligence in drug development, India may continue to play an important role in global pharmaceutical R&D, even as front-end commercial strategies evolve.
