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Informist, Thursday, Oct. 16, 2025

 

By Narayana Krishna

 

HYDERABAD - Uncertainties over US policies, pricing pressure, and market share erosion are likely to negatively affect the September quarter earnings of Indian pharmaceutical companies. Despite healthy growth in India and in international markets, stress in the high-margin US market may slow overall growth, according to analysts.

 

The 12 pharmaceutical companies that are part of the Nifty 200 index are projected to report an 8% on-year growth in their aggregate net profit for the September quarter, according to estimates. The net sales of these companies are likely to rise 10% on year, the estimates show. On a quarter-on-quarter basis, their net profit is expected to increase 9% while sales are seen rising 3%. Stronger growth in India and Europe is expected to offset some of the weakness in the US and this will help maintain overall earnings momentum, analysts said.

 

For companies mainly exporting generics, the US market remains challenging due to pricing pressure and lower sales of high-value drugs such as the generic Revlimid. However, excluding such one-offs, underlying US generic sales are expected to grow modestly, supported by new product launches and stable pricing in base portfolios for some companies, analysts said. At least eight companies launched their respective versions of generic Revlimid in the US, creating stiff competition that led to price erosion and a decline in market share.

 

In the healthcare space, two companies that are part of the Nifty 200 index are expected to report continued growth momentum in earnings for the September quarter, led by expansion into new cities and capacity additions, analysts said.

 

The aggregate net profit of these 14 companies together is projected to grow 10% year on year while net sales are seen rising 11%. Companies with large exposure to the domestic formulations business, such as Cipla Ltd., Glenmark Pharmaceuticals Ltd., and Lupin Ltd., are projected to post high single-digit growth in net profit and sales, supported by sustained demand across key therapies. However, domestic sales growth may be impacted due to the recent cut in the goods and services tax, which caused transition-related adjustments and destocking issues, according to Kotak Securities. Active pharmaceutical ingredient manufacturers are likely to benefit from improved volumes in the reporting quarter, driving an estimated 6% on-year growth in overall sales, analysts said.

 

In the US market, most companies are expected to see a sequential moderation in Revlimid sales due to rising competition and continued price erosion. However, excluding Revlimid, the underlying US generics portfolio is likely to grow around 5% quarter-on-quarter, aided by new launches and a stable pricing environment. Despite persistent pressure on high-value molecules, product diversification and consistent performance across other export geographies are expected to support overall revenue momentum, Kotak said.

 

Traction in the India business could help companies report a 7% on-year rise in revenues, while US sales may see a nearly 1% on-year decline for the companies under coverage, ICICI Securities said. The brokerage's estimates cover companies such as Sun Pharma, Cipla, Aurobindo Pharma Ltd., and Divi's Laboratories Ltd.

 

OUTPERFORMERS

Among pharmaceutical companies, Lupin Ltd. is expected to report a higher double-digit growth in both revenue and net profit for the September quarter. The company's net profit is projected to rise 35% on year to INR 11.5 billion on revenue of INR 65.1 billion, up 15% on year. Lupin's performance is expected to be driven by $330 million in US sales, led by the full-quarter benefit from the launch of kidney treatment drug Tolvaptan with a 180-day exclusivity and the launch of diabetes drug Glucagon, Kotak said.

Divi's Laboratories Ltd. is also likely to report better earnings for the September quarter, led by improvement in its custom synthesis business, according to ICICI Securities. Divi's Labs manufactures high-value specialty chemicals and has a business portfolio equally diversified between Europe and the US.

 

Traction in the nutraceuticals segment is also likely to aid Divi's performance for the quarter, according to Kotak. The average of estimates from five brokerages projects Divi's September quarter net profit to rise 16% on year and revenue to grow 14%.

 

Torrent Pharma and Dr. Reddy's Laboratories are among other companies expected to report better performance led by domestic sales during the quarter, according to estimates.

 

UNDERPERFORMERS

Despite a 22% on-year rise in sales, Mankind Pharma Ltd. is expected to report a 24% on-year decline in September quarter net profit, mainly due to the consolidation of Bharat Serums and Vaccines Ltd. In July 2024, Mankind Pharma acquired Bharat Serums for INR 137.7 billion and is in the process of integrating the company.

 

Sun Pharma is also likely to report a 3% on-year decline in net profit due to weak US sales, including the Revlimid impact, though revenue is expected to grow 7% for the quarter. Glenmark Pharmaceuticals is expected to report 2% on-year growth in net profit, while revenue is seen rising 5% on year.

 

Zydus Lifesciences Ltd. is projected to report 15% and 13% on-year growth in net profit and revenue, respectively. However, on a quarter-on-quarter basis, the company's net profit is seen falling 29% and revenue is projected to decline 10% due to lower Revlimid sales and price erosion in the US.

 

HEALTHY HEALTHCARE

Out of two healthcare companies, Max Healthcare Institute Ltd. is expected to perform well in the September quarter, led by capacity expansion and improved patient footfall across hospitals, according to analysts. Apollo Hospitals may see a single digit growth in hospitals business, while its consolidated numbers are likely to be boosted by pharmacy business.

 

Max Healthcare is projected to report a robust on-year net profit growth of 48% while revenue is seen rising 52% on year, according to the average of estimates from nine brokerages.

 

Chennai-based Apollo Hospitals is expected to report 19% and 11% on-year growth in its net profit and revenue, respectively. For Apollo, the hospitals business is expected to grow 8% on year in revenues while the pharmacy arm may rise 15%, and the diagnostics and clinics arm is projected to report 14% revenue growth for the quarter, according to Kotak.

 

MARGINS

Pharmaceutical companies, including Divi's Labs, Lupin, and Cipla, are likely to post better operating margins for the September quarter, led by an improved product mix and operating cost controls, according to Prabhudas Lilladher Pvt. Ltd. A high base in the US is likely to impact margins for most pharmaceutical companies during the quarter, the brokerage said.

 

Companies such as Zydus Life and Dr. Reddy's are likely to report margin contraction on a yearly basis, while Sun Pharma may see flat margins given the higher operating expenditure and specialty business-related costs, Prabhudas said. The high-margin custom synthesis business is likely to aid Divi's Labs' September quarter margins, ICICI Securities said.

 

Nuvama projected Aurobindo Pharma's September quarter EBITDA margin at 20.5%, citing the absence of meaningful product launches, a decline in Revlimid sales, and issues at its Pen-G unit in Kakinada, which impacted production during the quarter. Nuvama expects Lupin to report a 28?ITDA margin for the quarter, driven by one-off products in the US.

 

Following are the average of estimates from 10 brokerages for Jul-Sept earnings for pharmaceutical and healthcare sector companies that are part of the Nifty 200:

 

Company name	Net Sales, INR million	PAT, INR million	Sales Y-o-Y Change %	PAT Y-o-Y Change %	Sales Q-o-Q Change %	PAT Q-o-Q Change %
Alkem Laboratories +	37,654	7,371	10.27	7.03	11.69	13.17
Apollo Hospitals +	62,285	4,502	11.44	18.85	6.61	4.02
Aurobindo Pharma +	81,034	8,972	3.94	9.77	2.99	8.78
Biocon +	41,877	850	16.64	N.A.	6.24	170.76
Cipla +	74,620	13,975	5.83	7.29	7.25	7.70
Divi's Laboratories	26,289	6,025	14.20	16.32	11.54	8.17
Dr. Reddy's Lab +	86,988	13,922	8.22	10.87	1.48	(1.83)
Glenmark Pharmaceuticals +	36,017	3,629	4.89	2.44	10.33	674.15
Lupin +	65,085	11,541	14.73	35.36	3.83	(5.32)
Mankind Pharma +	37,436	4,972	21.68	(23.91)	4.85	13.43
Max Healthcare Institute +	25,957	4,183	52.02	48.45	28.02	35.84
Sun Pharma +	142,305	29,362	7.07	(3.42)	2.74	28.86
Torrent Pharma +	32,051	6,000	10.94	32.45	0.85	9.49
Zydus Lifesciences +	59,249	10,431	13.14	14.52	(9.87)	(28.88)
Total	808,847	125,736	10.67	9.67	4.17	9.16

 

Notes:+ Consolidated Figure
Y-o-Y: Year-on-Year
Q-o-Q: Quarter-on-Quarter
N.A.: Not Available

Estimates from: Emkay Global Financial Services Ltd, HDFC Securities Ltd, ICICI Securities Ltd, JM Financial Institutional Securities Pvt Ltd, Kotak Institutional Equities, Motilal Oswal Financial Services Ltd, Nirmal Bang Equities Pvt Ltd, Nuvama Wealth Management Ltd, Prabhudas Lilladher Pvt Ltd and YES Securities (India) Ltd.

 

End

Compiled by Shivaji Jagatap

Edited by Akul Nishant Akhoury

 

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