In distinction to the sturdy home outlook, the US market outlook is extra cautious for the Indian drug sector, with progress anticipated to decelerate as a consequence of worth erosion and declines in gross sales of Lenalidomide, the main income contributor, the earlier 12 months’s main income contributor, the drug, after a robust FY25, which elevated 9.9% year-on-year. Lenalidomide is used to deal with anemia (low pink blood cells) in sufferers with sure forms of myelodysplastic syndrome (MDS).
It additionally added that scrutiny of laws by the US Meals and Drug Administration (USFDA) is a unbroken threat issue, with warning letters and import alerts delaying product launches and inflicting penalties for dysfunction. These points additionally impose vital prices of correction, reminiscent of elevated administration bandwidth, the place we are inclined to weigh margins, reminiscent of elevated guide charges and administration bandwidth.
Along with uncertainty, on August 27, 2025, the latest imposition of a 50% tariff by the US on Indian imports throughout a number of sectors. ICRA co-group head speaks at a webinar for the Indian pharmaceutical business, “Business at a crossroads: Navigating international challenges and native alternatives”
Commenting on the efficiency of the home market, he stated the home market stays an essential progress driver for Indian pharmaceutical corporations. The enlargement of gross sales drive, elevated productiveness for medical representatives, deeper rural distribution, and new product launches are anticipated to help income progress of 8-10% in FY2026. ICRA pattern set corporations proceed to report double-digit enlargement (year-on-year progress of 10.3% within the first quarter of 2025) based mostly on progress based mostly on progress in generic submission, as a consequence of elevated market share of power therapies, new product introductions, and common worth hikes.
Latest authorities measures, together with GST exemptions and diminished charges for sure life-saving benges/normal medicines, and a few medical provides and tools, are anticipated to extend in keeping with India’s broader well being inclusion targets, enhancing affordability and accessibility.
The group additionally famous that the Indian pharmaceutical sector is experiencing reasonable progress in its present fiscal sector, at the same time as international headwinds and regulatory uncertainties overshadow the biggest export market.
The group stated revenues for the set of corporations within the pattern are projected to develop 7-9% in fiscal 12 months 2026, with progress of 8-10% within the home market and 10-12% in Europe.
Nevertheless, efficiency within the US market is anticipated to ease, with progress slowing to 3-5% year-on-year, slowing from almost 10% in 2025. The working revenue margin (OPM) of ICRA pattern entities remained at 24-25% in 201026, and shall be supported by favorable uncooked materials costs, improved working leverage and elevated share of specialty merchandise in keeping with 24.6% in 2025.
