Indian pharma firms plan ₹45,000-cr capex in FY26, says ICRA
India’s pharmaceutical sector, valued at nearly $50 billion, supplies more than 20% of global generic medicines and counts the US and Europe as its largest markets.
- Sep 18, 2025,
- Updated Sep 18, 2025 2:15 PM IST
Indian pharmaceutical companies are expected to undertake capital expenditure of ₹42,000–45,000 crore in FY2026, including around ₹25,000 crore in inorganic investments, according to ratings agency ICRA.
The sample set of companies is likely to see leverage rise modestly, with Total Debt/OPBITDA at 1.1–1.2x by March 2026, compared with 0.8x a year earlier. Liquidity is expected to remain strong, supported by cash reserves and liquid investments, it said.
Revenues for ICRA’s sample set are projected to grow by 7-9% in FY2026, aided by 8-10% growth in the domestic market and 10-12% growth in Europe. Growth in the US market is expected to moderate to 3–5%, against nearly 10% in FY2025. Operating profit margins are projected at 24-25% in FY2026, broadly in line with 24.6% in FY2025, the agency said.
Kinjal Shah, Senior Vice President & Co-Group Head, ICRA, said: “The domestic market continues to be a key growth driver for Indian pharma companies. Sales force expansion, improved productivity of medical representatives, deeper rural distribution, and new product launches are expected to support 8-10% revenue growth in FY2026 in the domestic market. ICRA’s sample set companies continue to report a double-digit expansion (10.3% YoY growth in Q1 FY2026, following 11.6% growth in FY2025), driven by market share gains in chronic therapies, new product introductions, and regular price hikes, despite subdued volume growth for branded generics, partly due to rising genericisation.”
India’s pharmaceutical sector, valued at nearly $50 billion, supplies more than 20% of global generic medicines and counts the US and Europe as its largest markets. With exports accounting for over half of revenues, Indian companies have traditionally relied on these geographies even as domestic demand rises steadily. The planned capex of ₹42,000-45,000 crore in FY2026 is higher than recent averages and reflects the industry’s intent to expand its specialty and complex drug portfolio, supported by policy measures such as GST exemptions on essential medicines and the government’s Production Linked Incentive (PLI) scheme.
ICRA highlighted risks in the US market, citing price erosion, declining sales of lenalidomide, and regulatory scrutiny from the US Food and Drug Administration, including warning letters and import alerts. It noted that the recent 50% tariffs imposed by the US on Indian imports across sectors do not currently cover pharmaceuticals, though future inclusion remains a risk.
In Europe, revenue growth of 10-12% is expected in FY2026, following an 18.9% increase in FY2025, supported by launches in injectables, respiratory products, and nicotine-replacement therapies. R&D spending is projected to remain steady at 6-7% of revenues, with companies focusing on complex molecules and specialty products, the agency said.
ICRA maintained a stable outlook on the sector, supported by demand, balance sheets, liquidity, and margins.
Indian pharmaceutical companies are expected to undertake capital expenditure of ₹42,000–45,000 crore in FY2026, including around ₹25,000 crore in inorganic investments, according to ratings agency ICRA.
The sample set of companies is likely to see leverage rise modestly, with Total Debt/OPBITDA at 1.1–1.2x by March 2026, compared with 0.8x a year earlier. Liquidity is expected to remain strong, supported by cash reserves and liquid investments, it said.
Revenues for ICRA’s sample set are projected to grow by 7-9% in FY2026, aided by 8-10% growth in the domestic market and 10-12% growth in Europe. Growth in the US market is expected to moderate to 3–5%, against nearly 10% in FY2025. Operating profit margins are projected at 24-25% in FY2026, broadly in line with 24.6% in FY2025, the agency said.
Kinjal Shah, Senior Vice President & Co-Group Head, ICRA, said: “The domestic market continues to be a key growth driver for Indian pharma companies. Sales force expansion, improved productivity of medical representatives, deeper rural distribution, and new product launches are expected to support 8-10% revenue growth in FY2026 in the domestic market. ICRA’s sample set companies continue to report a double-digit expansion (10.3% YoY growth in Q1 FY2026, following 11.6% growth in FY2025), driven by market share gains in chronic therapies, new product introductions, and regular price hikes, despite subdued volume growth for branded generics, partly due to rising genericisation.”
India’s pharmaceutical sector, valued at nearly $50 billion, supplies more than 20% of global generic medicines and counts the US and Europe as its largest markets. With exports accounting for over half of revenues, Indian companies have traditionally relied on these geographies even as domestic demand rises steadily. The planned capex of ₹42,000-45,000 crore in FY2026 is higher than recent averages and reflects the industry’s intent to expand its specialty and complex drug portfolio, supported by policy measures such as GST exemptions on essential medicines and the government’s Production Linked Incentive (PLI) scheme.
ICRA highlighted risks in the US market, citing price erosion, declining sales of lenalidomide, and regulatory scrutiny from the US Food and Drug Administration, including warning letters and import alerts. It noted that the recent 50% tariffs imposed by the US on Indian imports across sectors do not currently cover pharmaceuticals, though future inclusion remains a risk.
In Europe, revenue growth of 10-12% is expected in FY2026, following an 18.9% increase in FY2025, supported by launches in injectables, respiratory products, and nicotine-replacement therapies. R&D spending is projected to remain steady at 6-7% of revenues, with companies focusing on complex molecules and specialty products, the agency said.
ICRA maintained a stable outlook on the sector, supported by demand, balance sheets, liquidity, and margins.