Healthcare companies in India are projected to achieve high single-digit revenue growth in the fourth quarter of FY26, as per a report by Systematix. However, EBITDA margins are expected to undergo significant corrections. The report estimates a median growth of 12% for revenue and 3.6% for EBITDA, with a likely 14% decline in net earnings.
The decline in net earnings is primarily attributed to the loss of exclusivity in gRevlimid, impacting companies like Dr. Reddy’s, Zydus, Cipla, and Sun Pharma the most. Cipla may face additional challenges due to supply disruptions in Lanreotide. Lupin and Zydus could experience margin pressure from mirabegron-related royalty payments settlements.
The ongoing US–Iran conflict may have mixed implications on the quarter, with higher freight and raw material costs potentially offsetting the favorable impact of USD/INR appreciation. If the conflict persists, cost pressures could escalate in the upcoming quarters. API manufacturers are likely to pass on raw material inflation to formulation manufacturers, who may consider raising prices to expand their inventories.
Dr. Reddy’s is anticipated to witness a significant earnings decline as the contribution of gRevlimid diminishes. Any shelf stock adjustments related to gRevlimid could further impact the company’s earnings. Indian drug regulators are intensifying oversight on fast-growing weight-loss and diabetes therapies, especially GLP-1 receptor agonists, in anticipation of cheaper generic versions entering the market.
The Indian Pharmacopoeia Commission, under the Ministry of Health, is collecting and analyzing adverse event reports linked to these drugs to enhance post-marketing surveillance and address safety concerns promptly. This regulatory initiative aims to keep pace with the increasing demand for these therapies, particularly with improving affordability.
