Driving the growth is the continued pressure on manufacturers by Western governments to keep the escalating cost of prescription drugs as low as possible, as well as intensifying generic competition.
India has also lifted its game in the drug making arena of late, striving to provide standards of international quality, and now has the largest number of US Food and Drug Administration (FDA) approved plants on a worldwide scale.
In addition, the country's clinical trials industry has been experiencing unprecedented growth due to its vast patient pool, English speaking clinicians and low cost base.
With recent contract research and manufacturing agreements, India's Associated Chambers of Commerce and has estimated that the clinical trial market in the country will be $200m by 2007 and $1bn by 2010.
"Extensive foray, made by Indian pharmaceutical companies in the fields of research and development, and innovative drug production, along with growth in generic drugs played as a key driver," said the report by RNCOS titled: "World Pharmaceutical Market."
In particular, local drug makers, such as Ranbaxy, Dr Reddy's Laboratories and Cipla, are set to benefit from the new business influx.
India's pharma market is thriving again after decades in oblivion, now ranking fourth in the world, largely thanks to efforts by the government towards legal reform, raising manufacturing standards and reducing bureaucracy.
India's attractiveness as a global location for both pharma contract services and as a place to set up operations can also be attributed to the growing pool of skilled professionals in this sector, as well as low cost base, providing firms with increased competitiveness and profitability.