India pharma turns to specialty drugs as generics pricing bite deepens

Indian pharmaceutical companies head into 2026 with a clearer tilt towards specialty medicines as sustained pricing pressure continues to weigh on returns from traditional generics. With export markets offering limited pricing headroom and domestic price controls capping growth in large-volume therapies, companies are channelling fresh investments into oncology, diabetes, obesity, autoimmune and rare diseases, segments where pricing is less directly linked to volumes.
 
The stress on generics remains visible in current data. IQVIA’s latest assessment shows that in the US, which absorbs a significant share of India’s formulations exports, unbranded generics account for close to 90% of prescription volumes but less than 25% of total drug spending by value.
 
Price erosion in several mature molecules has continued through 2025 and into early 2026, with high single-digit annual declines in crowded categories. For Indian manufacturers built around oral solids and tender-driven contracts, this has translated into uneven revenues and persistent margin pressure.
 
Domestic market conditions provide limited relief. IQVIA’s India Pharmaceutical Market data for calendar year 2025, which sets the base for trends visible in early 2026, place the market size at over ₹2.4 lakh crore, with value growth of around 7–8%. Growth, however, is uneven. Large-volume therapies under the National List of Essential Medicines remain subject to price caps and periodic revisions, while faster value growth is concentrated in chronic and specialty segments such as oncology and anti-diabetic therapies. Branded generics continue to dominate prescriptions, but incremental growth is increasingly coming from fewer, higher-priced products.
 
“Plain-vanilla generics will not disappear, but their role will narrow. Volumes may survive, but strategic relevance will erode unless they are embedded within larger solutions,” said pharma analyst Salil Kallianpur. “Generics will increasingly resemble utilities essential, price-sensitive and commoditised,” he said pointing out at the growing limits of scale-led strategies," he said.
 
As per Sun Pharma’s FY25 annual filings, revenue from its global specialty business rose 17.1% year-on-year to $1.216 billion. Over FY25 and into FY26, specialty medicines in dermatology and oncology grew faster than the company’s US generics portfolio, helping cushion the impact of pricing pressure in North America. Products such as Ilumya and the oncology pipeline now form a material part of earnings visibility.
 
Similarly, Dr Reddy’s Laboratories continues to prioritise oncology, biosimilars and complex injectables. FY25 disclosures show consolidated revenues of Rs 3,25,535 crore, up 17% from the previous year, alongside sustained investment in biologics development and clinical trials into FY26. Management commentary accompanying results indicates that future launches will focus on differentiated therapies rather than a high volume of generic filings.
 
The pattern is visible across peers as well with Cipla tightening its portfolio around respiratory, oncology and select chronic therapies, while reducing exposure to less defensible products in the US. In parallel, Lupin, in its annual disclosures, has highlighted complex generics, biosimilars and metabolic disorders as areas where pricing pressure is lower than in commoditised oral formulations.
 
“The economics of plain generics are structurally changing. Sustainable growth will increasingly come from differentiated, clinically driven specialty therapies rather than pure scale or volume play. Indian pharma now has the scientific depth, regulatory maturity, and manufacturing capability to move decisively into complex generics, biologics, advanced drug-delivery systems, and niche chronic therapies, creating both global relevance and long-term value,” Nikkhil K. Masurkar, CEO, ENTOD Pharmaceuticals, said.
 
Metabolic diseases are drawing increased attention. While India’s diabetes population is estimated at over 100 million, company actions are beginning to reflect the commercial opportunity. Novo Nordisk’s rollout of GLP-1 therapies in India during 2025 has brought obesity and metabolic care into focus, even as Indian manufacturers evaluate biosimilar and next-generation options within their pipelines.
 
Oncology remains an area of continued investment. India reports more than 1.4 million new cancer cases annually, and company strategies increasingly align with this demand. Biocon Biologics, according to its FY25 disclosures, is expanding its biosimilar portfolio in oncology and autoimmune diseases, targeting domestic patients alongside regulated export markets.
 
For Indian drugmakers, the move towards specialty therapies comes with higher development costs and longer regulatory timelines. “Clinical trials, advanced manufacturing and regulatory capability requirements are materially higher than for conventional generics,” said Dr Rashmi Chaturvedi Upadhyay, founder and chief strategy officer at ProVanta Life Tech.
 
 “With pricing pressure in large-volume products showing little sign of easing in 2026, companies are increasingly directing capital towards segments where revenues are supported by complexity, clinical data and narrower competition rather than scale alone,” she said.