Will Indian pharma companies' revenue grow 7-9% in FY26 amidst US market risks?
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Synopsis
The Indian pharmaceutical sector is on track for a remarkable revenue growth of 7-9% in FY 2026, driven by burgeoning demand in domestic and European markets. This report sheds light on the dynamics affecting growth amidst challenges in the US market.
Key Takeaways
- Revenue Growth: Projected 7-9% growth in FY 2026.
- Domestic Demand: Strong performance expected in the local market.
- Profit Margins: Stable operating profit margins at 24-25%.
- US Challenges: Slowing growth due to regulatory uncertainties.
- R&D Focus: Increased emphasis on specialty products.
New Delhi, Sep 18 (NationPress) - The Indian pharmaceutical industry is projected to witness a revenue increase of 7-9 percent in FY 2026, fueled by robust domestic and European demand, despite facing considerable challenges in the US market, according to a report published on Thursday.
The ratings agency ICRA noted that while global challenges and regulatory uncertainties loom over the US, the domestic market is expected to grow by 8-10 percent, with Europe forecasted to see a growth of 10-12 percent.
Operating profit margins for these companies are anticipated to remain stable at 24-25 percent in FY26, aligning closely with the 24.6 percent margin in FY25, supported by favorable raw material costs, enhanced operational efficiency, and an increasing proportion of specialty products.
Revenue from the US market is expected to slow down, with year-on-year growth predicted to be between 3-5 percent, down from nearly 10 percent in FY 2025, as per the report.
“Companies sampled by ICRA experienced a 10.3 percent year-on-year growth in Q1 FY26, attributed to market share expansions in chronic therapies, new product launches, and regular price increases, despite modest volume growth in branded generics due to escalating generic competition,” stated Kinjal Shah, Senior Vice President & Co-Group Head at ICRA.
ICRA has maintained a 'stable' outlook for the sector, citing a consistent revenue growth trajectory and solid earnings, supported by strong balance sheets, ample liquidity, and resilient operating profit margins.
Domestic drug sales are benefiting from the expansion of sales teams, enhanced productivity of medical representatives, broader rural distribution, new product introductions, and recent GST exemptions on lifesaving medications.
Investment in research and development (R&D) is expected to remain steady at 6-7 percent of revenues, with companies increasingly concentrating on complex molecules and specialty products rather than generics.
Point of View
We recognize the resilience of the Indian pharmaceutical industry. With robust domestic demand and strategic adaptations, the sector is poised for growth. However, the challenges in the US market require careful navigation. Our commitment is to provide an informed perspective on these evolving dynamics, ensuring our audience stays updated with the latest developments.
NationPress
20/09/2025
Frequently Asked Questions
What is the projected revenue growth for Indian pharma companies in FY 2026?
The projected revenue growth for Indian pharmaceutical companies in FY 2026 is between 7-9 percent.
What factors are driving revenue growth in the Indian pharmaceutical sector?
Strong domestic demand, European market growth, and a focus on specialty products are key factors driving revenue growth.
How are operating profit margins expected to perform?
Operating profit margins are expected to remain stable at 24-25 percent in FY26.
What challenges does the US market pose for Indian pharma companies?
The US market is facing global headwinds and regulatory uncertainties, leading to a slowdown in revenue growth.
What is the expected R&D spending as a percentage of revenues?
R&D spending is projected to remain steady at 6-7 percent of revenues.
