Pharma Sector Update : Q1FY26 Quarterly Results Preview by Choice Broking Ltd
Pharmaceutical companies under our coverage are expected to report healthy revenue growth, averaging 11.9% YoY, driven by new product launches— particularly in the US—along with continued traction in the EU and Emerging Markets, and sustained outperformance vs. the IPM in the domestic market. We expect EBITDA to grow 14.3% YoY on average, supported by high-margin launches, improved product mix, favorable raw material pricing, and operational efficiencies across most companies. Trump’s latest announcement of pharma tariffs potentially reaching as high as 200% by next year may trigger short-term panic. However, with India’s ongoing efforts to negotiate a broader deal with the US and considering the US’s high dependence on India for generics, we remain confident in our earlier stance that steep tariffs on the sector are unlikely. Accordingly, we maintain our Positive view on the sector. Click here to read our in-depth view on the tariff.
Segment-Wise Outlook
Generics and Branded Generics
* India: Therapies such as Antidiabetic, Cardiac, and Oncology are expected to outpace overall IPM (Indian Pharmaceutical Market) growth. Additionally, the growing Nutraceuticals segment (DRRD) and new launches like Glempa (GLP) are likely to act as incremental growth drivers.
* United States: We believe the US business will continue to face headwinds, primarily due to challenges around gRevlimid and a limited number of high-margin launches. However, contributions from products like Tolvaptan (LPC) are expected to partially offset the impact.
* EU & Emerging Markets: Growth is likely to remain steady as companies continue to gain market share driven by cost-competitive generics, robust distribution networks, product innovation, and sustained momentum from new launches
APIs
API prices have corrected sharply in India, easing cost pressures. While US erosion persists, we believe a focus on high-value oncology APIs and increased backward integration should support margins.
CDMO
The CDMO space continues to witness healthy order inflows, a trend we expect to sustain given the strong manufacturing capabilities and capacity expansions being undertaken by companies.
Biosimilars
Companies like GLP, LPC, and DRRD are stepping up their presence in the Biosimilars through strategic collaborations, dedicated R&D, and a focus on affordable biologics.
High Conviction Investment Ideas
We continue to remain positive on Marksans Pharma and expect the company to deliver strong growth in Q1FY26E.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
