Pharmaceutical industry in India Q3 FY26 Results: India Formulations Shine as US Pricing Remains a Drag

Q3 FY26 Performance Snapshot

The Indian pharma sector delivered a steady Q3 FY26, with performance largely driven by domestic strength.

• Sales Growth: +13% YoY
• Operating Profit: +12% YoY
• PAT Growth: +1% YoY

While revenue and operating profit expanded in tandem, net profit growth remained muted due to margin pressures from higher input costs and elevated spending.

India & Emerging Markets Drive Growth

Double-digit growth in India formulations and emerging markets supported overall revenue momentum. Demand remained robust in chronic therapies, which continued to outperform non-chronic segments.

Key drivers included:

• Favorable product mix
• Diversification into branded portfolios
• Strong traction in domestic prescriptions

Margin Pressures Persist

Despite healthy topline expansion, profitability faced headwinds:

• Rising raw material costs
• Continued US pricing pressure in generics
• Subdued European market performance
• Higher R&D and advertising & promotion spends

Generic-focused players remained particularly vulnerable to US price erosion, limiting bottom-line expansion.

Segment Highlights

Companies with exposure to:

• CDMO (Contract Development & Manufacturing Organizations)
• Biosimilars
• Injectables

reported improved traction, healthy order books, and stronger medium-term revenue visibility.

This diversification trend is helping offset pricing challenges in traditional generics.

Company-Level Trends

• Stronger Sequential Performance:
  • Sun Pharmaceutical Industries Ltd
  • Lupin Limited
  • Zydus Lifesciences Limited
    
    
• Weaker QoQ Trends:
  • Cipla Limited
  • Dr. Reddy's Laboratories
  • Glenmark Pharmaceuticals

Performance divergence reflects varying exposure to domestic formulations, specialty segments, and US generics.

Outlook

The sector remains structurally positive, supported by:

• Strong India growth
• Expanding CDMO and specialty pipelines
• Chronic therapy demand resilience
  
  

However, sustained US pricing pressure and rising cost structures may continue to cap margin expansion in the near term.

Overall View:

Topline momentum is intact, but earnings acceleration will depend on margin stabilization and recovery in US generics pricing.