Pharma sector eyes 11% growth in Q1 FY26: Here's why
What's the story
India's pharmaceutical sector is expected to witness an 11% year-on-year growth in sales and EBITDA for the first quarter of FY26, a report by Kotak Institutional Equities has said. The growth is mainly due to strong market performance across geographies. However, muted domestic demand in April and March could slightly offset these gains, the report cautioned.
Sector performance
Hospitals, diagnostics segments likely to outperform
The hospitals segment is tipped to outperform the broader pharma industry, with a robust 17% growth in both revenue and EBITDA. This is mainly due to higher patient footfalls, addition of new beds, and a moderate rise in Average Revenue Per Occupied Bed (ARPOB). Meanwhile, diagnostics firms are likely to see a 14% jump in sales due to better test mix, organic volume expansion, and recent merger and acquisition activity.
Market overview
India's pharma market and global ranking
India's pharma market stood at $50 billion in FY24, with exports contributing $26.5 billion and the domestic market valued at $23.5 billion. Globally, India ranks third in production volume and 14th in value, with a very strong portfolio of generics, over-the-counter drugs, vaccines, biologics, and biosimilars. The National Accounts Statistics 2024 showed that the gross output from pharmaceuticals was around ₹4.56 lakh crore in FY23 at constant prices with ₹1.75 lakh crore in value addition.
Investment strategy
Centre is investing in pharma R&D and education
The Centre continues to invest in pharma R&D and education. Seven National Institutes of Pharmaceutical Education & Research (NIPERs) have been set up by the Department of Pharmaceuticals to promote top-grade academic and industry-oriented research. These institutions also support the postgraduate and doctoral training in advanced pharma specializations. To further boost innovation, the department has introduced a national policy on research & development and innovation in the Pharma-MedTech sector.