Is India’s healthcare sector ready for execution in 2026?

After two decades of growth driven largely by scale and generics, 2025 proved to be a reset year for India’s pharmaceutical, healthcare and medical devices sectors. Policy reform, a renewed focus on innovation and greater attention to quality and affordability came together, setting the stage for a phase where execution will matter more from 2026 onward, industry leaders said.

In pharmaceuticals, the year brought together several reforms that had been taking shape over time. The rollout of the Next-Gen GST framework, tighter quality requirements under the revised Schedule M guidelines and the announcement of new research incentives pointed to a move away from volume-led growth towards higher-value activity. At the same time, steps to simplify regulation under the Viksit Bharat 2047 agenda have raised expectations of quicker approvals and smoother business operations.

“This has been a significant year for the sector,” said Satish Reddy, Chairman of Dr. Reddy’s Laboratories, referring to the announcement of the Research, Development and Innovation (RDI) scheme and the Promotion of Research and Innovation in Pharma (PRIP) scheme. These initiatives, he said, are helping strengthen links between industry and academia and supporting work on new drug delivery systems. “Wider access to risk capital would be essential if India is to move beyond being a global supplier of generics and into pharmaceutical innovation,” Reddy added.

The policy push comes at a time when global competition is set to intensify. Medicines worth more than $300 billion are expected to lose patent protection worldwide over the next seven years, opening space for complex generics, biosimilars and next-generation therapies. Indian drugmakers have already started adjusting through licensing deals, acquisitions of higher-value assets and regulatory filings in speciality areas.

According to Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance, 2025 represents a turning point in this transition. “The Next-Gen GST reform has strengthened affordability and patient access, while revised quality standards have brought Indian manufacturing closer to global norms,” Jain said. “The focus now shifts to execution,” he added, pointing out that the next five years will determine how effectively policy momentum translates into results.

The scale of ambition is large. India’s pharmaceutical market is currently valued at around $60 billion and is expected to reach about $130 billion by 2030, according to the Department of Pharmaceuticals. Longer-term projections by industry bodies and consultancies such as EY suggest the broader life sciences sector could expand further, potentially reaching $450–500 billion by 2047, driven by innovation, higher-value products and global expansion.

Beyond drug manufacturing, healthcare delivery also saw visible change in 2025, particularly in diagnostics, hospitals and digital health. Investment moved beyond basic digitisation towards wider use of data and automation. Artificial intelligence began playing a bigger role in diagnostics, clinical workflows and decision-making.

“2025 saw the sector move beyond incremental progress,” said Ameera Shah, President of NATHEALTH and Executive Chairperson of Metropolis Healthcare. Hospitals, diagnostics chains, digital health companies and MedTech providers, she said, increased investments in automation and data infrastructure, while efforts around quality alignment and domestic manufacturing helped strengthen system reliability. Medical devices followed a similar path. Despite geopolitical uncertainty and tariff pressures, the MedTech sector remained stable through 2025, supported by steps such as the rollback of select quality control orders on chemical inputs and closer regulatory alignment. The extension of PRIP to the Pharma–MedTech segment is expected to support domestic R&D.

“The emphasis must now shift from manufacturing scale to innovation depth,” said Himanshu Baid, Managing Director of Poly Medicure. “Deeper localisation of components, higher investment in R&D and faster clinical validation will be key to expanding market share at home and abroad,” he said, adding that trade negotiations could help ease tariff-related pressures on exports.

Multinational health-tech companies also see momentum building. “Policy changes such as GST reforms have energised the sector and reinforced India’s ambition to become a MedTech innovation hub,” said Bharath Sesha, Managing Director of Philips India. “Artificial intelligence will play a growing role not only in diagnostics and efficiency but also in improving use of existing healthcare infrastructure, provided training and capability building keep pace,” he added.

Affordability remains a shared concern across the healthcare system. “US President Donald Trump has taken some steps toward reducing drug prices. Similar measures would be hugely beneficial in India, where many cannot afford healthcare,” said Dr Anoop Misra, Chairman of Fortis C-DOC Hospital for Diabetes and Allied Sciences and Director of the National Diabetes Obesity and Cholesterol Foundation. “Lower prices of expensive medicines improve adherence, disease control and reduce the burden of complications,” he added.