India’s pharma sector eyes modest FY growth as US market clouds loom

NEW DELHI: India’s pharmaceutical sector is poised for moderate growth in the current fiscal, even as global headwinds and regulatory uncertainties cast a shadow over its largest export market, the US.

According to ratings agency ICRA, revenues for its sample set of companies are projected to expand by 7-9% in FY2026, supported by 8-10% growth in the domestic market and 10-12% growth in Europe. However, performance in the US market is expected to moderate, with year-on-year growth slowing to 3-5%, from nearly 10% in FY2025. The operating profit margins (OPM) of ICRA’s sample entities is expected to remain resilient at 24-25% in FY2026, broadly in line with nearly 25% in FY2025, aided by favourable raw material prices, improved operating leverage, and a rising share of specialty products.Commenting on the domestic market performance, Kinjal Shah, senior VP & co-group head, ICRA, said: “The domestic market continues to be a key growth driver for Indian pharma companies. Sales force expansion, improved productivity of medical representatives, deeper rural distribution, and new product launches are expected to support 8-10% revenue growth in FY2026 in the domestic market. ICRA’s sample set companies continue to report a double-digit expansion (10.3% YoY growth in Q1 FY2026, following 11.6% growth in FY2025), driven by market share gains in chronic therapies, new product introductions, and regular price hikes—despite subdued volume growth for branded generics, partly due to rising genericisation.

”Recent govt measures, including GST exemptions and rate reductions on select lifesaving/ general medicines, and some medical supplies and equipment, are expected to enhance affordability and accessibility, aligning with the country's broader healthcare inclusion goals.In contrast to the robust domestic outlook, the US market outlook is more cautious. After a strong FY2025, where revenues grew nearly 10% over the previous year, growth is expected to slow down due to price erosion and declining sales of lenalidomide, a key revenue contributor in previous years.