US market to dent India pharma earnings even as domestic growth remains firm: Report

New Delhi [India], April 9 : India's pharmaceutical sector is likely to witness steady domestic growth but continued pressure in the US market in the fourth quarter of FY26, according to a report by Nuvama Institutional Equities.

The report noted that while the domestic business remains robust, overall profitability is expected to be impacted by margin pressures and weakness in exports.

"We reckon revenue/EBITDA/PAT of our coverage universe shall grow 10%/3%/-6% YoY," the report said, adding that "the aggregate EBITDA margin stands at 23.1% (-178bp YoY)."

Domestic demand is expected to remain a key growth driver, supported by strong performance across therapies such as cardiac, anti-diabetic and oncology.

"Domestic business to expand 12% YoY led by strong Cardiac and Anti-diabetic therapy performance," the report highlighted.

It further added that the Indian Pharmaceutical Market (IPM) recorded a strong 12 per cent YoY expansion, led by robust performance across key therapies, Oncology (33 per cent), Cardiac (16 per cent), Anti-diabetic (16 per cent).

However, the US market is expected to remain a drag on overall growth, particularly due to pricing pressures and the decline in sales of key drugs.

"As gRevlimid is undergoing high price erosion, companies... are set to post a decrease in their US revenue," the report said.

It also flagged additional challenges for select companies, noting that Cipla is also set to face a dual impact from the end of gRevlimid and Lanreotide-related issues.

Among major firms, companies such as Sun Pharma, Dr Reddy's, Zydus and Ajanta are expected to lead domestic growth, while others may face earnings pressure due to export headwinds and cost factors.

The report also pointed to margin pressures across the sector, stating that EBITDA margins are expected to decline both year-on-year and sequentially due to factors such as pricing erosion, product mix and higher operating costs.

Overall, the sector outlook remains mixed, with strong domestic demand partially offsetting global challenges, particularly in the US generics market.

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