Indian pharma revenue growth is expected to accelerate to 11-13 per cent this fiscal from 8 per cent last year, driven by a 14-16 per cent rise in exports as drugmakers expand beyond the US into Europe, Asia, Africa and Latin America, ratings agency Crisil has said.
The report said higher raw material, energy and freight costs are likely to put pressure on profitability, with operating margins expected to contract by 150-200 basis points to 21-21.5 per cent, the analysis said.
The report prepared its assessment based on nearly 190 pharmaceutical companies rated by Crisil, which together account for about half of the sector’s revenue.
Exports are expected to be the key growth driver, with revenue from overseas markets projected to increase 14-16 per cent in rupee terms this fiscal. The sector derives nearly half of its revenue from exports, with formulations accounting for about 83 per cent of these exports.
“Export growth is broadening beyond the US. Complex generics and biosimilars are expected to deepen the sector’s presence in Europe, while branded generics and new launches will accelerate growth across Asia, Africa and Latin America,” said Sehul Bhatt, Director, Crisil Intelligence.
Bhatt said that in the US, differentiated product launches and inventory normalisation are expected to partly offset continued pricing pressure. He added that a broader geographic and product mix would drive export growth.
According to the report, the domestic pharmaceutical market is also expected to expand 9-11 per cent this fiscal. Chronic therapies are likely to remain the main growth driver, supported by the increasing prevalence of lifestyle-related diseases.
Domestic growth will also be supported by annual price revisions of 5-6 per cent and a recovery in volume growth to 4-5 per cent, compared with around 2 per cent in each of the past two fiscals. New product launches, stronger prescription demand, improved field-force productivity and greater penetration in tier 2 and tier 3 cities are expected to support volumes.
“The sector’s growth momentum is strengthening, but earnings will face a cost test this fiscal,” said Aditya Jhaver, Director, Crisil Ratings.
He said higher energy, freight and feedstock costs amid geopolitical volatility in West Asia are expected to outweigh near-term benefits from higher operating leverage and a richer product mix.
Despite the margin pressure, pharmaceutical companies are expected to maintain resilient credit profiles, supported by strong cash generation, liquidity and healthy balance sheets. Debt-to-EBITDA is expected to remain around 1.2 times, while interest coverage is likely to stay close to 10 times.
Crisil said key risks to the sector include further increases in input and freight costs, possible US tariffs on pharmaceutical exports, large debt-funded acquisitions and integration delays, as well as unresolved regulatory issues.
Published on September 24, 2026
