Growth Drivers in the Indian Market
The domestic pharmaceutical market remains a key growth engine. According to ICRA, India is likely to witness 8–10% revenue growth in FY26, driven by:
-
Expansion of sales forces and deeper penetration into rural markets.
-
Increased productivity of medical representatives.
-
New product launches, particularly in chronic therapies.
-
Moderate price hikes supporting revenue even amid subdued generic volumes.
In Q1 of FY26, ICRA’s sample companies recorded 10.3% year-on-year growth, following a robust 11.6% growth in FY25. This shows the industry’s consistency in outperforming global peers.
European Market Momentum
US Market Challenges
Despite strong past growth, the US market is likely to slow down to 3–5% in FY26, compared to nearly 10% in FY25. The key reasons include:
-
Pricing pressures reducing margins.
-
Declining sales of some generic products.
-
Stricter USFDA regulatory scrutiny, which has led to import alerts, product launch delays, and warning letters.
-
Rising remediation costs for companies to comply with US standards.
Another looming risk is the US government’s tariff and pricing policies. While pharmaceuticals are exempt from the new 50% import tariffs for now, the proposed “most favoured nation” pricing policy could put future pressure on Indian exporters.
Role of Government Measures
Rising Focus on Research and Development
Indian pharma companies are also stepping up their R&D investments, with spending rising to 6–7% of revenues. Focus areas include:
-
Complex molecules.
-
Speciality drugs.
-
Biologics and advanced therapies.
This shift signals a move beyond traditional generics towards high-value, differentiated products, which will help companies remain globally competitive.
Monopoly Pharma & Manufacturing Opportunities
As the industry grows, the concept of monopoly medicine company in India is gaining popularity. Monopoly pharma companies allow franchise partners to operate in specific regions without competition, ensuring better margins and stable business opportunities.
At the same time, outsourcing to a pharma contract manufacturing company has developed into an economical approach. There is also a preference of many Indian pharma businesses to use contract manufacturing in order to save overheads, increase product portfolios, and satisfy the growing demand in both home and foreign markets.
Outlook for FY26
Despite US headwinds, the long-term outlook for India’s pharma sector remains strong:
-
Domestic market to remain the backbone of growth.
-
Europe to provide robust expansion opportunities.
-
Enhancing accessibility and affordability by providing more government support.q
-
Increasing investments on research and development as well as contract manufacturing in a bid to enhance global competitiveness.