The Indian pharmaceutical sector is expected to post healthy revenue growth in the April-June quarter (Q1FY27), supported by domestic demand and acquisitions, but the US business is likely to remain under pressure. That extends a trend seen over the past two quarters as sales of the blockbuster blood cancer drug Revlimid have waned for major generic drugmakers.
Brokerages HDFC Securities and Nuvama expect sector revenue to grow 13-15% year-on-year, driven largely by the domestic market. However, profitability is likely to lag. Nuvama expects Ebitda to rise just 2% year-on-year, while profit after tax could decline 13%.
Ebitda margins are also expected to remain under pressure.
“We expect pharma segment margins to remain under pressure, as increase in input costs, pricing pressures in the US business, absence of (generic) Revlimid, steady R&D, and higher SG&A (freight cost was up 10% YoY and 51% QoQ) are likely to impact margins this quarter,” HDFC Securities pharma analyst Mehul Sheth said in a 13 July note.
The contract research, development and manufacturing (CRDMO) business, however, is expected to sustain margins, he added.
Investors will get their first read on these trends this week as the sector's June-quarter earnings season begins. Dr. Reddy's Laboratories reports on Wednesday, followed by Cipla on Thursday and Sun Pharma on 31 July.
Strong domestic growth
Domestic formulations are expected to grow 13% year-on-year, excluding the impact of Torrent Pharma's acquisition of JB Chemicals, which was formally integrated in July. Including the combined Torrent-JB Chemicals business, domestic growth for the sector could rise to 17%, according to HDFC Securities.
The Indian pharmaceutical market grew 12% year-on-year in April-May 2026, well above the three-year quarterly average of 9%. Growth was led by oncology, anti-diabetic therapies (driven by GLP-1 drugs), cardiac, urology, vitamins, minerals and nutrients (VMN), and pain therapies, all of which expanded more than 12%.
Other therapies, including gastrointestinal, central nervous system, dermatology, gynaecology and respiratory, also posted double-digit growth, while anti-infectives and ophthalmology recorded high single-digit gains.
Companies with strong exposure to specialty and chronic therapies, including Zydus Lifesciences, Torrent Pharma, Sun Pharma and Dr. Reddy's Laboratories, are expected to report robust domestic growth.
US business stays muted
Growth in the US is expected to remain subdued as the windfall from Revlimid fades. The drug's patent expiry earlier this year has opened the market to more generic competition, reducing earnings for companies such as Dr. Reddy's, Sun Pharma, Zydus Lifesciences and Aurobindo Pharma.
Ongoing pricing pressure in the base generics business and a relatively thin pipeline of relevant new launches are also expected to weigh on performance. That could be partly offset by traction in products such as generic Spiriva and generic Jynarque for Lupin, and generic Myrbetriq (mirabegron), used to treat overactive bladder, for Zydus and Lupin, according to HDFC Securities.
Nuvama analyst Shrikant Akolkar expects US revenue for his coverage universe to decline 5% year-on-year.
“From our coverage, we forecast a decrease in the US generic business of Zydus/Lupin (Mirabegron competition), Cipla (Lanreotide withdrawal) and Dr Reddy's (gRevlimid ended),” he wrote in a 10 July note. Aurobindo Pharma, however, could buck the trend, with US revenue expected to rise 9% year-on-year, aided by the rupee tailwind and the launch of generic Pomalyst.