Budget 2026 puts API makers, specialty pharma, and diagnostics in pole position

Union Budget 2026 | Investor attention is expected to turn to active pharmaceutical ingredient (API) makers, specialty drug companies, and organised diagnostics after the Union Budget 2026-27, with companies that combine manufacturing scale, complex product portfolios and organised healthcare delivery seen attracting capital, sector analysts said.

API and intermediates players such as Divi’s Laboratories, Aurobindo Pharma, Granules India, and Laurus Labs are among the companies in view, supported by their backward integration and regulatory track records.

“The Budget clearly favours companies that have already invested in depth — whether in APIs, complex manufacturing or compliance,” said Salil Kallianpur, a pharma analyst. “This is less about immediate earnings upgrades and more about where capital is likely to be sustained over the medium term.”

Specialty drugmakers seen better placed

Among formulation companies, players with specialty portfolios and differentiated delivery systems are seen better placed. Dr. Reddy’s Laboratories, Cipla, Sun Pharma and Zydus Lifesciences feature among potential beneficiaries as market preference continues to move away from price-led generics towards complex therapies, injectables, and specialty products.

“The policy architecture increasingly supports differentiated and outcome-linked products rather than pure volume-led exports,” Kallianpur said, adding that scale and R&D capability are emerging as important factors.

Biologics draw sustained investor interest

Biologics and biosimilars were also highlighted as segments drawing sustained investor interest. Biocon and Biocon Biologics stand out due to their global partnerships and commercial pipelines, while Lupin and Zydus Lifesciences continue to invest in complex biologic platforms.

Private equity investors echoed this view. “Biopharma SHAKTI is a positive step towards helping Indian pharma move up the value chain,” said Sunil Thakur, Partner, and Investment Committee Member at Quadria Capital.

Institutional assessments have also pointed to policy support for biologics and healthcare services. In its Union Budget 2026-27 review, Fident Asset Management said higher pharma allocations and the multi-year Biopharma SHAKTI programme are positive for biologics and biosimilar manufacturers, while proposals to develop five regional medical tourism hubs support hospitals and diagnostics.

India Ratings & Research drew attention to the scale of the programme. “With an outlay of ₹100 billion over five years, Biopharma SHAKTI addresses rising demand for biologics and biosimilars driven by non-communicable diseases, while the creation of over 1,000 accredited clinical trial sites improves India’s standing as a clinical research destination,” said Krishnanath Munde, Associate Director at India Ratings & Research.

Diagnostics, medtech and insurers gain traction

Organised diagnostics players such as Dr. Lal PathLabs and Metropolis Healthcare were also mentioned, supported by steady demand for preventive testing and chronic disease monitoring. Medtech companies and distributors, including Trivitron Healthcare, Siemens Healthineers India and Philips Healthcare, are also expected to benefit alongside healthcare infrastructure expansion.

“Diagnostics is increasingly integral to healthcare delivery,” Kallianpur said.

Digital health platforms such as Practo, PharmEasy, MedPlus Health and Tata 1mg, along with health insurers including Star Health & Allied Insurance, ICICI Lombard and HDFC ERGO, were described as indirect beneficiaries as healthcare delivery becomes more data led.

Price-led generic players face pressure

By contrast, pure-play generic exporters competing largely on price, MSME manufacturers without compliance investments, and asset-heavy companies lacking innovation pipelines are likely to remain under pressure.

“The message is implicit,” Kallianpur said. “Capital is moving towards businesses built on complexity, scale, and data. Others will find it harder to keep pace.”