Indian Pharma Sector Eyes 7-9% Growth in FY26 Amid US Challenges
India’s booming pharmaceutical industry is set for a solid 7-9% revenue growth in FY 2026, thanks to strong demand from the domestic market and Europe. Even with a slowdown in the US – its biggest export hub – the sector remains optimistic, according to a fresh report from ratings agency ICRA released on Thursday.
The report highlights how global challenges and regulatory hurdles are hitting US sales hard. Still, experts predict 8-10% growth in India’s domestic pharmaceutical market and an impressive 10-12% jump in Europe. This comes as US revenues are expected to cool down to just 3-5% year-on-year growth, down from nearly 10% in FY 2025.
ICRA’s analysis shows that operating profit margins for pharma companies should hold steady at 24-25% in FY26, similar to the 24.6% seen in FY25. What’s helping? Lower raw material costs, better operational efficiency, and a shift towards high-value specialty products over basic generics.
In the first quarter of FY26, ICRA’s sample of companies clocked a 10.3% year-on-year revenue rise. "This growth came from grabbing more market share in chronic therapies, launching new products, and steady price increases – even though branded generic volumes dipped a bit due to more generics entering the market," explained Kinjal Shah, Senior Vice President and Co-Group Head at ICRA.
The agency has kept a ‘stable’ outlook on the Indian pharma sector, citing reliable revenue streams, solid earnings, healthy balance sheets, strong cash reserves, and those robust profit margins.
Boosting domestic sales are smart moves like expanding sales teams, ramping up medical reps’ productivity, pushing deeper into rural areas, rolling out fresh products, and recent GST exemptions on critical lifesaving drugs. This is fueling the growth of the domestic pharmaceutical market.
On the innovation front, research and development (R&D) spending in the pharma sector is likely to stay at 6-7% of revenues. Companies are now prioritizing complex molecules and specialty drugs, moving away from plain generics to build a stronger future.
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