Indian pharma sector revenue growth to ease to 7-9% in FY26: Crisil

Crisil projects India pharma growth at 7-9% in FY26 as exports to regulated markets slow after a US high base while domestic sales benefit from tax cuts and launches

India’s pharmaceutical sector is projected to grow 7–9 per cent this fiscal, moderating from about 10 per cent last year, while operating profitability is expected to remain steady at 22–23 per cent, according to Crisil.

 

The slowdown is attributed mainly to exports to regulated markets, which are likely to temper after a high base created by advance purchases from the United States in the previous fiscal. Formulation exports to these markets are expected to rise 9–11 per cent, slower than the 14 per cent growth seen in the past two years.

 

Semi-regulated markets, which account for around 41 per cent of formulation exports, are likely to post lower growth of 5–7 per cent, constrained by sharp currency depreciation in some countries and recurring quality-related concerns.

   

Domestic revenues, however, are expected to grow 7–9 per cent, supported by annual price revisions, product launches and government-led tax cuts. The exemption of life-saving and cancer drugs from GST, along with the reduction of GST on several other medicines to 5 per cent from 12 per cent, is expected to improve affordability and boost demand for essential therapies. Analysts expect this to accelerate a shift from unorganised to organised players in the generics market.

 

Aniket Dani, director, Crisil Intelligence, said: “Formulation exports to regulated markets should grow 9–11 per cent this fiscal, slower than 14 per cent in the past two, largely on account of a high base. About 70 per cent of these exports are to the US. Looking ahead, the launch of new products and drug shortage in the US will support exports.”

 

Crisil said the risk of US tariffs on Indian pharmaceutical exports—currently being reviewed under Section 232 of the US Commerce Department’s Trade Expansion Act—remains a key monitorable. However, it noted that replacement risk for Indian generics in the US is low.

 

Indian manufacturers account for over 40 per cent of US generic prescriptions and enjoy a 35–40 per cent cost advantage compared with domestic US manufacturing. Even if tariffs are imposed, the largely non-discretionary nature of pharmaceuticals will allow companies to pass on a significant portion of the impact, though the extent will depend on product complexity and competition.