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Informist, Monday, Jan. 12, 2026    

                 

By Narayana Krishna

 

HYDERABAD - Indian pharmaceutical companies that are part of the Nifty 200 index are likely to report modest year-on-year growth for the December quarter, owing to improving domestic formulation sales and steady momentum in non-US export markets. This is despite pressure on US revenues due to the high base from generic cancer drug Revlimid sales and ongoing pricing challenges. Europe and other emerging markets are likely to contribute to the overall growth of these companies, driven by new product launches and relatively stable pricing, analysts said.

 

The 12 pharmaceutical companies that are part of the Nifty 200 are projected to report 1% on-year growth in their aggregate net profit for the December quarter, according to estimates from eight brokerages. The net sales of these companies are likely to rise 10% on year, the estimates showed. On a trailing-quarter basis, their net profit is expected to fall 18%, while sales are seen declining 3%.

 

Companies for whom nearly 45-50% of total sales come from the US are likely to report a significant fall in net profit as well as margins for the December quarter. The revenues of these companies may, however, rise in the quarter, boosted by growth in non-US markets. Excluding Revlimid-type one-offs, underlying US generic sales are expected to grow modestly, supported by new product launches, although pricing erosion remains a challenge, analysts said.

 

"Despite the Revlimid cliff, we expect 8% and 2% year-on-year growth in overall sales and EBITDA in Oct-Dec, led by steady ex-Revlimid US sales and healthy growth in India and non-US markets," Kotak Institutional Equities said.

 

In the healthcare space, three companies that are a part of the Nifty 200 are expected to report moderate earnings growth on a year-on-year basis for the December quarter, led by capacity expansion.

 

The aggregate net profit of these 15 pharmaceutical and healthcare companies is projected to grow 3% on a year-on-year basis, while net sales are seen rising 11%. Except for Biocon Ltd. and Aurobindo Pharma Ltd., most pharma and healthcare companies are likely to report a fall in net profit on a trailing basis, as their sales growth moderated or declined sequentially during the quarter.

 

US A DRAG

Headwinds in the US market are likely to have impacted several Indian pharmaceutical companies in the December quarter, mainly due to the loss of market share in key generics such as Revlimid and continued pricing erosion across existing portfolios. Three pharma companies in the index – Cipla Ltd., Dr Reddy's Laboratories Ltd., and Sun Pharmaceutical Industries Ltd. — are expected to report 13% year-on-year fall in their cumulative net profit during the quarter due to Revlimid related impact. Their combined net sales are expected to rise only 5% on year, largely due to the high base of the previous year.

 

"On an ex-Revlimid basis, we expect 2% quarter-on-quarter growth in overall US generics sales for relevant companies," Kotak Equities said.

 

Offsetting the impact of Revlimid, Aurobindo Pharma Ltd. is likely to report 8% on-year growth in net profit, led by new launches and improved supplies from its injectables plant unit-III, which had faced regulatory issues earlier. Biocon Ltd. is another exception and is expected to report a significant rise in earnings, helped by a low base from the previous year.

 

US generics are likely to weigh on performance, with continued price erosion in generic Revlimid and a decline in Tolvaptan prices expected to impact select companies, Nirmal Bang Institutional Equities said. Tolvapatan is a drug used to treat low sodium conditions. A meaningful recovery in the US market is expected to remain gradual, limiting near-term margin expansion, the brokerage added.

 

DOMESTIC GROWTH

Pharmaceutical companies with large exposure to the Indian market are likely to benefit from price increases and new launches during the December quarter. Companies such as Dr Reddy's, Cipla, Sun Pharma, Alkem Labs, Glenmark Pharma, Mankind Pharma, Torrent Pharmaceuticals, and Zydus Life are expected to be key beneficiaries of domestic market growth, analysts said.

 

Although overall volume growth is expected to be around 1% on year, companies are likely to outperform market growth, supported by strong traction in chronic therapy portfolios and a healthy rise in prescription-based sales, Nirmal Bang said.

 

Despite volume growth of around 1% in the December quarter, these companies are still delivering close to 10% revenue growth from Indian operations because pricing and product mix, rather than volumes, drive topline expansion.

 

During the quarter, companies implemented annual wholesale price index-linked price hikes and National List of Essential Medicines–related price revisions, which directly lifted realisations even without a significant increase in unit sales.

 

In addition, a richer product mix – led by higher sales of chronic therapies, specialty products, and branded generics – supported revenue growth, as these segments carry higher prices and better margins. New launches, improved prescription share, and a shift toward higher-value therapies further boosted revenues, allowing companies to generate strong growth despite muted underlying volume expansion. Revenues from segments like CDMO and specialty chemicals like custom synthesis in active pharmaceutical ingredients category was another contributor to the overall domestic sales growth in value terms, analysts said.

 

Kotak Equities expects domestic sales growth of 8–13% year-on-year in the December quarter, with companies such as Dr. Reddy's and Mankind Pharma likely to post strong growth. Overall domestic sales across the sector are seen rising about 10% on year, aided by sustained demand and improving market share across categories, the brokerage added.

 

Within the pharma space, companies such as Divi's Laboratories Ltd., largely involved in active pharmaceutical ingredients and custom synthesis products, are expected to perform better due to an uptick in volumes. Companies with exposure to the contract research and development organisation segment are also likely to report a strong performance for the quarter.

 

In the healthcare space, all three companies — Apollo Hospitals Enterprise Ltd., Fortis Healthcare Ltd., and Max Healthcare Institute Ltd. — are expected to report moderate year-on-year growth, led by capacity expansion. However, earnings in this segment are likely to remain muted on a trailing basis due to seasonal weakness and increased bed capacity, which could reduce average revenue per occupied bed, a key metric in the sector.

 

"Hospital companies with a focus on case and pay or mix have seen steady ARPOB (average revenue per occupied bed) growth. However, occupancy in Oct-Dec is expected to remain muted, largely due to seasonality and the impact of new bed additions," HDFC Securities said.

 

Sector major Apollo Hospitals is likely to see a decline in occupancy due to a high base in its hospitals business, while Max Healthcare may see some impact of delays in the integration of acquired hospitals. Both Apollo Hospitals and Max Healthcare are expected to report healthy traction in their diagnostic services businesses, HDFC Securities said.

 

MARGIN PRESSURE

Pharmaceutical and healthcare companies are likely to have seen margin pressure persisting in the December quarter despite modest revenue growth, analysts said. Companies such as Cipla, Dr. Reddy's, Lupin, and Sun Pharma may face margin pressure on both a year-on-year and trailing basis due to continued price erosion in the US.

 

Pricing challenges in the US generics market continue to weigh on profitability, limiting margin expansion. At the same time, higher spending on research and development, as well as on sales, general, and administrative expenses, is expected to offset operating leverage benefits, keeping margins under check, HDFC Securities said.

 

Despite robust sales growth, some domestic formulations companies are also likely to face near-term margin softness as they continue to invest in field force expansion through the addition of new medical representatives. While these investments support medium-term growth, they are expected to raise costs in the December quarter, constraining margin expansion, analysts said.

 

In the contract research and development segment, margins are expected to remain largely stable rather than expand, as companies absorb costs related to the ramp-up of newly commissioned capacities. The hospital business may also see some pressure on operating margins, driven by lower occupancy levels and new bed additions, which typically weigh on profitability during the initial phases of scale-up, analysts said.

 

Following are the average of estimates from eight brokerages for the Oct-Dec earnings of 15 pharmaceutical and healthcare sector companies that are a part of the Nifty 200 index:

 

Company	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 +	37,308	5,898	11	-6	-7	-23
Apollo Hospitals +	63,230	4,748	14	28	0	-1
Aurobindo Pharma +	84,271	9,169	6	8	2	8
Biocon +	45,359	1,895	19	2,607	6	97
Cipla +	74,953	12,324	6	-22	-1	-9
Divi's Laboratories	26,555	6,356	16	7	-0	-9
Dr. Reddy's Lab +	83,474	11,378	-0	-20	-5	-16
Fortis Healthcare +	22,632	2,626	17	17	-3	-12
Glenmark Pharmaceuticals +	37,414	5,179	10	49	-38	-74
Lupin +	67,888	12,391	18	45	-4	-16
Mankind Pharma +	36,069	5,106	13	37	-2	-0
Max Healthcare Institute +	24,991	3,918	34	25	17	-20
Sun Pharma +	1,47,511	30,223	8	-6	2	-3
Torrent Pharma +	32,257	5,963	15	19	-2	-1
Zydus Lifesciences +	63,803	9,423	21	-8	4	-27
Total	8,47,713	1,26,596	11	3	-3	-18

 

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 Avishek Dutta

 

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