New Delhi: The Indian pharmaceutical sector needs price adjustments, site relocations, and intellectual property (IP) transfers to navigate ongoing uncertainties amid US tariffs, according to a report by Systematix Research.
The report noted that tariff-related uncertainty persists, with companies hesitant to expand capacities in the US. It emphasized, “Price increases, site relocations, and IP transfers are the three tools the industry requires to deal with tariffs.”
Meanwhile, raw material prices are sharply correcting in certain segments, particularly antibiotics, as customers reduce inventory to capitalize on lower costs. Overall, generic API prices have stabilized.
Companies remain cautiously optimistic about new growth opportunities and product launches, which could help offset the erosion from high-value launches. On the CDMO front, requests for proposals (RFPs) for custom synthesis and CDMO services remain robust. Several companies are also preparing for day-one launches of GLP-1 products in India and other emerging markets.
Firms continue to evaluate inorganic growth options carefully. Domestic demand for anti-infectives remained weak during the quarter, while expanding over-the-counter (OTC) platforms remains a key focus.
On the earnings side, 1QFY26 was weak overall, with underperformers outnumbering outperformers. Most players recorded mid-to-high single-digit organic growth in the Indian pharma segment, while the US market faced margin pressures due to price erosion.
Among the outperformers, Sun Pharma (SUNP) exceeded expectations thanks to lower operational costs. Its India business was strong, though US generics underperformed. Pfizer (PFIZ) saw growth rebound at 7 percent, aided by reduced operational expenses. Syngene (SLPA) also outperformed, benefiting from higher-than-expected licensing income.
On the weaker side, Orchid Pharma (ORCP) faced challenges due to declining cephalosporin API volumes, likely from customer destocking ahead of price corrections. Piramal Pharma (PLM) experienced pressure on exports due to Chinese dumping. Dr. Reddy’s Laboratories (DRRD) saw softness in its high-value US generics business, impacting margins, while Divi’s Laboratories (DIVI) reported in-line revenue with slightly weaker margins.
The report concluded that although the Indian pharma sector faces near-term uncertainty, companies are positioning themselves for long-term growth opportunities.
