Pharma, Healthcare Sectors Shine in BT500 2025 list

Twenty-nine per cent. Yes. That’s the rise in profit after tax (PAT) of India’s healthcare sector in FY25. This makes it the second-fastest growing sector after non-ferrous metals in the list of top 10 profitable sectors. No wonder the world’s top private equity (PE) and venture capital funds are vying for a share of this fast-expanding pie. The sector has received $13 billion PE funding over last five years, representing 8–9% of the total PE activity in India, up from 2% in 2018. From Sun Pharma’s billion-dollar-plus PAT to Apollo Hospitals’ growing margins, the sector has emerged as one of the most important profit engines of India Inc.

Raining Profits

The pharmaceutical industry was a standout performer in FY25, combining growth with resilience. The largest drug maker, Sun Pharma, posted a 13.8% rise in PAT to Rs 10,980 crore. Revenues rose 8.4% to Rs 52,578 crore, while operating profit jumped 20% to Rs 17,237 crore, reflecting strong operational efficiency.

Tausif Shaikh, research analyst at BNP Paribas Securities India, says Sun Pharma’s India business is expected to outperform industry growth of 8–10% in FY26, driven by leadership in key therapies, strong brand presence, and higher contribution from chronic treatments. He says the global specialty revenue will grow with the launch of Leqselvi (a treatment of Cushing’s disease) and Unloxcyt (targeted therapy used in oncology) and scale-up of existing products. Shaikh says the combined contribution of specialty products and domestic formulations is likely to rise from 50% in FY25 to 52% in FY27, supporting the expansion of EBITDA margins. Dr. Reddy’s Laboratories posted a more modest PAT growth of 2.6% to Rs 5,725 crore, but revenues surged 16.5% to Rs 32,644 crore, driven by its generics portfolio. Co-Chairman and MD G. V. Prasad says the company remains focused on strengthening its base business, delivering pipeline assets, and improving productivity. Cipla reported a 27.3% rise in profits to Rs 5,291 crore, supported by cost efficiencies and steady demand for respiratory and chronic therapies. MD and Global CEO Umang Vohra said in a recent investor call that the company will focus on key markets, building flagship brands, investing in product pipeline and focusing on resolutions on the regulatory front.

Cipla is confident about its FY26 growth trajectory. Aman Goyal, research associate at Axis Securities, says the company aims to accelerate launches in North America, expand margins in South Africa, and strengthen presence in domestic branded prescriptions and trade generics. In emerging markets, it will focus on deeper penetration while maintaining margin stability, he adds.

Cipla has given FY26 EBITDA margin guidance of 23.5–24.5%. Goyal says the company is targeting $1 billion US revenues by FY27, supported by respiratory, oncology, peptide, and biosimilar launches. Internal biosimilar assets are expected around 2029–30, while GLP-1 therapies could drive domestic growth from FY27, he says.

Other major pharma players also reported healthy gains. Zydus Lifesciences’ profits grew 20.4% to Rs 4,615 crore, while revenues increased nearly 20.4% to Rs 45,681 crore. Aurobindo Pharma posted a 10% rise in profits to Rs 3,484 crore. Lupin reported one of the sharpest turnarounds with profits jumping 70.8% to Rs 3,306 crore.

Mid-sized companies mirrored this momentum. Divi’s Laboratories posted a 36.9% rise in profits to Rs 2,191 crore, driven by strong demand for active pharmaceutical ingredients and contract research services.

Mankind Pharma’s PAT rose 3.6% to Rs 2,007 crore, Torrent Pharma ’s profits grew 15.4% to Rs 1,911 crore, and Natco Pharma posted a 35.7% jump in PAT to Rs 1,883 crore, supported by niche oncology launches. Operating margins of these top drug makers ranged between 25% and 33%, with PAT margins of 15–20%, highlighting the sector’s ability to generate stable, scalable earnings.

According to IBEF, India is the third-largest producer of pharmaceuticals by volume, and the industry is expected to reach $65 billion by 2024 and $130 billion by 2030. Indian companies account for about 20% supply of global generics, making the sector a magnet for domestic and foreign investors alike.

Hospitals Gain Scale

Hospital chains also featured among the top profit earners. Apollo Hospitals reported a 61% rise in profits to Rs 1,505 crore. Max Healthcare posted profits of Rs 1,076 crore with revenues rising 30% to Rs 7,028 crore. Both benefitted from higher occupancy and demand for specialised procedures. Apollo’s operating margin was 14.8%, while Max’s was 28.5%, pointing to advantages from scale and efficiency. An EY–FICCI report says India’s healthcare delivery market could reach $132 billion by 2030 by growing 15–17% annually.

PE investment has accelerated sector consolidation. Blackstone has acquired a majority stake in CARE Hospitals, TPG is backing Manipal Hospitals’ expansion, while KKR has bet on Max Healthcare. These moves have helped hospitals scale up operations and expand coverage. Kaivaan Movdawalla, Partner and National Healthcare Leader at EY Parthenon India, says healthcare has been a major focus for PE funds. “More than 140 M&A deals in the past two years highlight ongoing consolidation. The healthcare provider landscape remains fragmented, with 45,000–50,000 units, of which only 3% have more than 100 beds, compared with 40–45% in the US and China,” says Movdawalla.

Diagnostics companies have also done well by expanding mainly through higher test volumes, supported by franchise growth and public–private partnerships in smaller towns. “The sector’s growth is supported by rising awareness, increasing insurance coverage, and the government’s push for accessible care,” says Movdawalla. A report by Bajaj Finserv AMC says India’s healthcare market has grown from $110 billion in 2016 to $372 billion in 2023, a CAGR of 22.5%, and is projected to reach $638 billion by 2025.

Investor Appetite

Strong profit growth translated into valuation gains. Sun Pharma’s market value rose 32.7% to Rs 4.2 lakh crore, Cipla gained 15.9% to Rs 1.2 lakh crore, and Dr. Reddy’s rose 9.5% to Rs 1.06 lakh crore. Lupin’s market cap surged 53% to Rs 94,115 crore. Hospital operators also saw an uptick. Max Healthcare’s market cap grew 49% to Rs 1.01 lakh crore, while Apollo Hospitals rose 21% to Rs 98,267 crore.

Healthcare is increasingly attracting investor interest because it combines resilience with growth. “Unlike cyclical sectors, demand here is non-discretionary and rising—driven by an ageing population, increasing incidence of lifestyle diseases, and greater affordability through insurance. India is also a global leader in generics manufacturing and is now scaling up in R&D, digital health, and medical technology. These structural strengths make healthcare one of the most dependable long-term growth sectors for India,” says Dr. Harsh Mahajan, Chairman FICCI-Health & services & Founder Mahajan Imaging & Labs.

An analysis by Equirus Capital highlights steady growth in India’s pharmaceutical and healthcare sectors between FY23 and FY25. Large integrated pharma companies saw revenue growth of about 11%, with operating margins reaching nearly 26% by FY25. The active pharmaceutical ingredients (API) segment demonstrated a strong recovery, with margins near 29%, reflecting capacity expansion and backward integration. Generic drugmakers faced pricing pressures in the US but maintained profitability through cost controls and growing sales in emerging markets.

Hospitals posted revenue growth of 16%, driven by higher bed occupancy, improved case mix, and a 10% rise in average revenue per occupied bed. Expansion efforts included Apollo’s Rs 2,000 crore investment in Tier-II cities, Max Healthcare’s Rs 1,500 crore for new facilities, and Fortis’ Rs 800 crore for upgrades.

Investment activity has been high, with Equirus counting 39 deals in FY25. These included IPOs, block trades, qualified institutional placements, mergers, and PE funding, reflecting investor confidence.

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