Archive · 19 Aug 2026
Pharma Growth Holds Firm as Costs Threaten FY27 Margins
India’s medicine industry began FY27 with strong sales growth.
Sales rose 11.5% compared with the same quarter last year.
This was the fifth quarter in a row with double-digit growth.
Medicines for long-term illnesses, new products, and diabetes treatments helped sales.
However, sales of generic medicines in the United States fell by 8% for the companies studied.
One reason was that gRevlimid sales were no longer available.
Contract drug manufacturing, called CDMO, grew quickly and may help offset weaker US sales.
Higher costs for materials, shipping, and other inputs may reduce profit margins.
Ind-Ra still expects margins to remain above their historical averages.
Ind-Ra expects India’s domestic pharma market to grow about 10% in FY27.
Industry sales rose 11.5% year-on-year in Q1 FY27, marking five straight quarters of double-digit growth.
US generics revenue declined 8% for 13 tracked companies because of pricing pressure and missing gRevlimid sales.
CDMO revenue grew at a double-digit rate and is expected to remain a growth support through FY27.
Higher material and logistics costs are expected to soften margins, though they should remain above historical averages.
- Who
- India Ratings (Ind-Ra) and the 15 pharma companies it tracks.
- What
- The agency forecast continued pharma-sector growth in FY27 but warned that rising costs and weak US generics demand could reduce margins.
- When
- The assessment covers Q1 FY27 and the full FY27 financial year; July sales growth was also cited.
- Where
- India’s domestic pharma market and the United States generics market.
- Why
- Domestic demand, chronic therapies, new products, and CDMO growth are supporting revenue, while costs, pricing pressure, and regulatory scrutiny are creating risks.
Growth Supports
Margin and Market Risks
Overall sector outlook
Growth Supports
Ind-Ra expects domestic pharma growth of about 10% in FY27, supported by chronic therapies, new products, pricing, volume expansion, and GLP-1 adoption.
Margin and Market Risks
Higher input and logistics costs, geopolitical pressures, and tighter regulatory scrutiny could weigh on profitability and product approvals.
International business
Growth Supports
CDMO revenue grew at a double-digit rate, with strong enquiries, improving capacity utilisation, and new capacity expected to support further growth.
Margin and Market Risks
US generics revenue declined 8% for the tracked companies because of pricing pressure, product-specific challenges, and the absence of gRevlimid sales.
Profit margins
Growth Supports
Favourable product mix, currency factors, pass-through mechanisms, strong balance sheets, and liquidity are expected to keep EBITDA margins healthy.
Margin and Market Risks
Material and logistics costs and the absence of one-off gains are expected to push margins lower, although Ind-Ra said they should remain above historical averages.
- FY27 domestic market forecast
- About 10% growth, according to Ind-Ra.
- Q1 FY27 industry sales
- 11.5% year-on-year growth.
- Consecutive growth streak
- Five quarters of double-digit industry sales growth.
- US generics revenue
- Down 8% year-on-year for 13 companies tracked by Ind-Ra.
- Q1 FY27 gross margin
- Around 70%.
- Q1 FY27 EBITDA margin
- Around 23%.
- July sales growth
- 12.1% year-on-year.