The pharmaceutical sector in India has emerged as a global leader, contributing significantly to the production of affordable generic drugs and vaccines. Despite its success, the industry faces challenges from early research and development stages to market deployment. This research paper explores the future prospects and challenges of integrating Artificial Intelligence (AI) into the Indian pharmaceutical sector. Methodologically, the research relies on secondary data from 2011 to 2019, collected from various published sources, primarily the Reserve Bank of India. The evaluation of performance was conducted using compound annual growth rate. AI has the potential to address longstanding issues, enhance operational efficiency, and reduce costs associated with drug discovery and development. Successful integration requires collaborative efforts from the public and private sectors, emphasizing resource allocation for education, infrastructure, regulatory reforms, and workforce development. The incorporation of AI presents a transformative opportunity for the Indian pharmaceutical sector, offering advancements in drug development, manufacturing, and quality control. Despite the promising prospects, the paper acknowledges challenges in implementing AI, including financial limitations, workforce competency, data security concerns, and regulatory complexities. The study emphasizes the need for strategic collaboration to ensure responsible and effective utilization of AI in the pharmaceutical industry.