Indian pharmaceutical sector to log 7-9% growth in FY26 despite United States (US) headwinds: ICRA

India’s pharmaceutical sector is projected to post revenue growth of 7-9% in FY26, supported by strong domestic demand and steady gains in Europe, according to ICRA’s latest outlook. The domestic market is expected to expand 8-10%, driven by sales force expansion, wider rural reach, and new product launches. Chronic therapies, new introductions, and price hikes continue to propel branded generics, with companies reporting a 10.3% YoY rise in Q1 FY26 after 11.6% growth in FY25. Government measures such as Goods and Services Tax (GST) exemptions and rate cuts on select lifesaving drugs and medical supplies are improving affordability and advancing healthcare inclusion. European revenues are forecast to grow 10-12% in FY26, following an 18.9% jump last year, aided by new product approvals and stable pricing trends.
In contrast, the United States (US) market remains challenging. After 9.9% growth in FY25, revenue is expected to moderate to 3-5% in FY26 amid pricing pressures and continued regulatory scrutiny by the US Food and Drug Administration (USFDA), leading to warning letters, import alerts, and launch delays. These issues add remediation costs and strain profit margins. Although pharmaceuticals are currently exempt from the newly imposed 50% US tariff on Indian imports, the risk of inclusion persists, and a proposed most-favoured-nation pricing policy could further weigh on margins. Indian pharmaceutical companies are also increasing research and development investments to 6-7% of revenues, focusing on complex molecules and specialty products to sustain growth and mitigate external risks.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.