ANALYSIS
High base, rise in costs hit pharmaceutical, healthcare companies Q1 earnings
This story was originally published at 19:39 IST on 21 August 2026
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By Narayana Krishna
HYDERABAD – Higher operating costs and a high base effect impacted the June quarter earnings of Indian companies in the pharmaceutical and healthcare sector, with large firms mostly missing the profitability estimates of analysts. The revenue growth, however, was better than anticipated for most.
The 16 pharmaceutical and healthcare companies that are a part of the Nifty 200 index reported a 4.42% on-year fall in net profit for the June quarter -- excluding one-time items -– close to analysts' estimates of a 4.86?ll. Their revenue grew 15.46% on year, higher than expectations of 13.66%.
Out of these 16 companies, only nine surpassed consensus estimates for net profit growth, while 11 beat revenue estimates for the June quarter. The pharma and healthcare sector's aggregate performance lagged the Nifty 200 companies' overall net profit growth of 9.7%. In terms of revenue, these companies' 15.46% growth also fell behind the Nifty 200 companies' overall revenue growth of 21% for the quarter.
Profitability of pharmaceutical and healthcare sector was mainly boosted by companies such as Biocon Ltd., Laurus Lab Ltd., Sun Pharmaceutical Industries Ltd., and Divi's Laboratories Ltd., which posted much higher net profit growth than expected. Excluding them, the remaining companies collectively reported a net profit decline of 13.29% on year even as their revenue grew 16.21%.
Excluding three healthcare companies under coverage, 13 pharmaceutical companies, including Biocon, reported an on-year fall of 6.20% in its aggregate net profit while revenue grew 14.95%. Biocon reported significantly higher adjusted net profit growth for the June quarter due to a low base. Excluding Biocon's performance, the aggregate net profit of the 15 pharma and healthcare companies fell 6.60% while revenue grew nearly 15.35%.
OUTPERFORMERS
Low base effect helped pharmaceutical companies such as Biocon, Laurus Labs, Sun Pharma and Glenmark Pharmaceuticals Ltd. contribute significantly to the sector's June quarter net profit and revenue growth. Aurobindo Pharma Ltd., Lupin Ltd. and Divi's Laboratories also added to the overall earnings growth.
Among the pharma companies, Laurus Labs surprised with a significant jump in its net profit and revenue, as its contract development and manufacturing organisation business saw traction during the quarter. While Biocon earnings performance was aided by growth in its biologics business and a lower profit base, Divi's Lab reported strong net profit growth and decent margin for the quarter.
For Aurobindo Pharma, growth in Europe and emerging markets for the reporting period helped beat estimates, while Lupin's earnings were boosted by specialty products and new launches.
SECTOR LAGGARDS
Lower contribution from high value generic products and increased operating costs took a toll on some pharmaceutical companies. Nifty 50 index constituents Dr. Reddy's Laboratories Ltd. and Cipla Ltd. reported weak performance for the June quarter as both companies faced pressure in their North America sales. Absence of generic cancer drug Revlimid sales impacted Dr. Reddy's, Sun Pharma, Cipla as well as Aurobindo Pharma for the June quarter. Besides high base of Revlimid, quality issues related to its obesity and diabetic drug semaglutide also took a toll on Dr. Reddy's June quarter performance.
The normalisation of high-margin opportunities and a less favourable product mix weighed on margins of these companies, resulting in a decline in net profit compared to the year-ago quarter.
Cipla posted its third straight quarterly decline in net profit in the June quarter, weighed down by a sharp increase in expenses and subdued revenue growth. While consolidated sales were broadly in line with analysts' estimates, net profit fell short of even the already muted expectations for the quarter.
Higher operating costs and increased tax expenses dragged down Alkem Laboratories Ltd.'s June quarter net profit while the bottom line was slightly lower than the Street's estimate.
HEALTHCARE
Out of the three healthcare companies that are part of the Nifty 200 index, Apollo Hospitals Enterprise Ltd. reported better-than-expected earnings performance, whereas Max Healthcare Institute Ltd. and Fortis Healthcare Ltd. missed net profit estimates for the quarter.
Aided by contributions from existing hospitals and improved occupancy across regions, Apollo Hospitals, delivered a healthy performance in the June quarter, led by strong momentum in its core hospitals business. Higher occupancy levels, improved average revenue per patient, and a richer case mix in high-value specialties along with improvement in international patients' footfall supported revenue growth.
The pharmacy and digital health platforms holding company Apollo HealthCo Ltd. and diagnostics arm Apollo Health and Lifestyle Ltd. also made a meaningful contribution for the quarter. Improved operating leverage and cost efficiencies across hospitals and allied segments expanded margins year-on-year, driving healthy growth in the bottom line during the quarter.
Max Healthcare Institute Ltd.'s net profit growth for the June quarter fell below estimates due to margin pressure led by higher costs related to new hospitals. Similarly, Fortis Healthcare Ltd. reported lower-than-expected net profit due to a steep rise in operating costs.
The following table shows the performance of the 16 companies from the pharmaceutical and healthcare sector in the Nifty 200 index vis-a-vis the consensus estimate for each company as well as the consensus estimate for the sector and the Nifty 200:
|
Company |
PAT beat analysts' estimate |
Apr-Jun |
Adjusted YoY PAT |
Revenue beat analysts' estimate |
Apr-Jun |
Revenue YoY |
|
Pharma & healthcare sector |
NO |
-4.42 |
-4.86 |
Yes |
15.46 |
13.66 |
|
Nifty 200 |
Yes |
11.73% |
-6.02% |
Yes |
21.12 |
18.67% |
|
Apollo Hospitals Enterprise Ltd |
Yes |
34.17 |
28.82 |
Yes |
20.56 |
18.00 |
|
Cipla Ltd |
No |
-39.19 |
-35.61 |
Yes |
2.33 |
2.29 |
|
Dr.Reddy's Laboratories Ltd |
No |
-68.67 |
-44.67 |
No |
-5.51 |
-3.84 |
|
Sun Pharmaceutical Industries Ltd |
Yes |
36.00 |
-2.78 |
No |
10.46 |
12.08 |
|
Divi's Laboratories Ltd |
Yes |
59.96 |
14.32 |
Yes |
26.18 |
17.17 |
|
Torrent Pharmaceuticals Ltd |
Yes |
7.12 |
-2.02 |
Yes |
54.85 |
43.52 |
|
Zydus Lifesciences Ltd |
No |
-34.69 |
-27.68 |
Yes |
21.96 |
15.85 |
|
Aurobindo Pharma Ltd |
Yes |
30.07 |
18.59 |
Yes |
16.30 |
13.44 |
|
Biocon Ltd |
Yes |
392.36 |
253.91 |
No |
10.00 |
13.21 |
|
Fortis Healthcare Ltd |
No |
-1.31 |
15.18 |
Yes |
17.46 |
16.35 |
|
Glenmark Pharmaceuticals Ltd |
Yes |
930.33 |
32.34 |
Yes |
23.10 |
16.32 |
|
Laurus Labs Ltd |
Yes |
125.49 |
44.40 |
Yes |
29.10 |
15.17 |
|
Lupin Ltd |
Yes |
16.08 |
8.09 |
Yes |
32.04 |
24.25 |
|
Mankind Pharma Ltd |
No |
29.60 |
33.80 |
Yes |
12.89 |
11.54 |
|
Alkem Laboratories Ltd |
No |
-21.72 |
-12.70 |
No |
10.95 |
12.06 |
|
Max Healthcare Institute Ltd |
No |
4.71 |
28.28 |
No |
16.70 |
34.17 |
The following table shows the net profit margin of pharmaceuticals and healthcare companies, excluding exceptional items, for Apr-Jun:
|
PAT Margin for Jun-26 |
PAT Margin for Jun-25 |
PAT Margin for Mar-26 |
|
|
Nifty 200 |
11.07% |
12.34% |
14.78% |
|
Pharma & healthcare sector |
13.31% |
16.08% |
13.83% |
|
Company |
PAT Margin for Jun-26 |
PAT Margin for Jun-25 |
PAT Margin for Mar-26 |
|
Apollo Hospitals Enterprise Ltd |
8.24% |
7.41% |
8.01% |
|
Cipla Ltd |
11.08% |
18.65% |
8.48% |
|
Dr.Reddy's Laboratories Ltd |
5.49% |
16.54% |
2.93% |
|
Sun Pharmaceutical Industries Ltd |
20.25% |
22.36% |
18.57% |
|
Divi's Laboratories Ltd |
29.96% |
23.63% |
27.07% |
|
Torrent Pharmaceuticals Ltd |
11.93% |
17.24% |
10.84% |
|
Zydus Lifesciences Ltd |
11.95% |
22.31% |
22.01% |
|
Aurobindo Pharma Ltd |
11.72% |
10.48% |
10.41% |
|
Biocon Ltd |
3.57% |
1.23% |
4.57% |
|
Fortis Healthcare Ltd |
10.09% |
11.43% |
11.77% |
|
Glenmark Pharmaceuticals Ltd |
12.02% |
11.34% |
17.90% |
|
Laurus Labs Ltd |
18.14% |
10.39% |
16.11% |
|
Lupin Ltd |
17.10% |
19.45% |
21.29% |
|
Mankind Pharma Ltd |
14.09% |
12.28% |
16.77% |
|
Alkem Laboratories Ltd |
13.90% |
19.32% |
10.31% |
|
Max Healthcare Institute Ltd |
13.63% |
15.19% |
15.97% |
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Data Compiled by Vinod Bhovad
Edited by Deepshikha Bhardwaj
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