This paper examines the influence of government policy on the performance of India's Pharmaceutical industry. Starting with a brief note on the global position and growth of the pharmaceutical industry in India, the paper analyzes the profitability trend of the pharmaceutical industry between 1969 and 1999. It divides the trend into three periods on the basis of profit trends and analyzes the regulatory environment prevalent in those three stages. Finally the paper concludes that regulatory policy exerts great degree of influence on the performance of the pharmaceutical industry.This paper examines the influence of government policy on the performance of India’s Pharmaceutical industry. Policy environment is a dominant variable in determining the profitability of the pharmaceutical industry. The pharmaceutical industry is uniquely positioned in a welfare state. Medicines affect sensitive human development indicators. Drug prices determine health accessibility of the nation’s population. Pharmaceutical research and development expenditure help countries combat life-threatening diseases.

Due to their social and economic stature, Pharmaceutical industries all over the world face immense regulation. Most governments try to regulate pharmaceutical industries under the two broad objectives: 1) Maintaining reasonable drug prices and 2) Developing the pharmaceutical industry Both objectives contrast each other as they represent rival interests i.e., interests of consumers and interests of business. The result is a complex gamut of laws and policy that affects the fundamental performance indicators of the pharmaceutical industry.The Indian pharmaceutical industry is a small but growing component of the $400 bn global pharmaceutical industry valued at approximately $7.2 bn. The US leads the world’s drug production with a 21% share of the market while India’s share in the global drug production is barely 1.2%. (Pharmaceutical Compendium 2001, Organization of Pharmaceutical Producers of India).

Industry, pharmaceutical, global, policy, development, environment, government, production, profitability, accessibility, business, market, Organization, regulation, growth,Pharmaceutical industry,research and development , government policy.