India’s pharmaceutical sector is witnessing mixed performance, with strong momentum in contract development and manufacturing organisations (CDMOs) and active pharmaceutical ingredients (APIs), while generics and branded formulations face ongoing headwinds, according to an analysis by Equirus Capital.

CDMOs recorded 11% revenue growth in FY25, outpacing their 8% CAGR between FY23–25, driven by firms like Sai and Divis. API players grew at 12.6%, significantly higher than their 7.6% CAGR. Meanwhile, generics growth slowed from 10.6% in FY24 to 7.6% in FY25, impacted by US pricing pressures, geopolitical risks and tender setbacks in RoW markets. Branded formulations saw growth from chronic therapies and product launches, but margins were diluted by higher promotional and field force expenses.

Operational gains were seen in EBITDA margin expansion, aided by improved product mix and execution in regulated markets. ROCE, however, remained muted due to under-utilised greenfield facilities and acquisition-led debt. Companies are rationalising R&D investments to monetise existing ANDA filings rather than prioritising fresh approvals.

M&A activity signalled strategic shifts: Mankind acquired BSV to strengthen its specialty portfolio, while Eris picked up Biocon’s domestic branded assets. Trade generics and Jan Aushadhi schemes are eroding branded volumes in acute therapies, pushing players to refocus on high-value segments.

The INR 5,000 crore PRIP scheme aims to unlock INR 17,000 crore in additional R&D investment. With 24 blockbuster drugs worth over USD 250 billion losing exclusivity by 2030, Indian firms have a generational opportunity to expand their global generics footprint—if they can overcome current operational and regulatory hurdles.

As India aims to move up the value chain, balancing innovation-led growth with cost efficiencies will be key to building long-term pharma leadership.