Initiating coverage on the India healthcare sector with a positive outlook, the brokerage said Indian biopharma is entering an “innovation power decade.” It is better positioned to create value through specialty medicines and incremental innovation rather than by attempting to replicate the new-molecule discovery model of global pharmaceutical giants.
“Our proprietary model simulated AI adoption use cases in various functions in Indian pharma business like R&D, manufacturing operations and quality, and field force,” Bernstein said. “We estimate by 2035, AI adoption will add 3-4 pp to the sector's bottom line.”
The brokerage estimates that R&D and manufacturing operations could account for nearly 70 per cent of the AI-led profitability gains.
Bernstein argues that Indian pharma's next phase of growth will be driven by what it calls “Rainmakers” — niche, high-return innovation opportunities capable of generating meaningful revenues without requiring the massive capital commitments associated with discovering entirely new drugs.
These opportunities include 505(b)(2) products, orphan drugs, drug-device combinations, drug repurposing, GLP-1 and other metabolic peptides, as well as RNA- and cell-based therapies such as CAR-T.
“We call these Rainmakers as they have the potential to add meaningful revenues in the range of $100-500 million and high teen percentage return on R&D investments,” the report said.
The brokerage estimates these innovation categories together represent nearly $400 billion in global opportunity. These could add $70-75 billion in revenues to the Indian biopharma industry over the next decade.
In contrast, Bernstein cautioned against Indian companies aggressively pursuing the traditional Big Pharma model of discovering new molecular entities from scratch.
“Our analysis suggests that building an incremental innovation pathway that produces Rainmakers provides highest return per rupee of invested capital,” it said.
According to the report, Indian drugmakers continue to lag global innovators in areas such as R&D programme efficiency, clinical development and specialised commercialisation capabilities. These make large-scale novel-drug discovery a less attractive use of capital.
Instead, Bernstein expects Indian companies to move steadily up the value chain from conventional generics to complex specialty products and innovation-led businesses.
The brokerage projects the Indian biopharma industry to grow from about $57 billion in FY25 to nearly $195 billion by 2035. This implies 13 per cent compound annual growth rate (CAGR), compared with industry consensus estimates of around 10 per cent.
“We believe the industry will expand to $195 billion in size over the next decade and gain global market share upwards of 6 per cent,” Bernstein said.
The brokerage estimates that of the about $140 billion incremental industry opportunity by 2035, around $126 billion will come from innovation-led revenues.
Only about $12 billion would be contributed by traditional generics, bulk drugs and active pharmaceutical ingredients.
 "AI in Pharma")