"All companies in pharma industry must ensure that they invest good part of their topline in Riamp;D. Because if you do not have pipeline of new drug delivery or new molecules, you will always have problem down the line," he said.
"By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth and the sixth largest market globally in absolute size.
"Increase in the size of middle class households coupled with the improvement in medical infrastructure in the country will influence the growth of the pharmaceuticals sector," he added.
The Minister asked the companies to make a proper balance between making profits and protecting consumer interests.
"We must have a trade-off. We cannot take only one of that issue for granted," he said.
"We will make sure that the industry grows and at the same time the consumer interest is also adequately protected."
Prabhu also said that Indian pharma firms were facing problems of market access in China, which had been resolved following his talks with the Chinese Commerce Minister.
According to a Commerce Ministry release, the Indian pharmaceuticals market witnessed a compound annual growth rate of 5.64 per cent during 2011-16, with the market increasing from $20.95 billion in 2011, to $27.57 billion in 2016.