India's healthcare sector to see stronger growth, US generics to lag

India's healthcare sector is poised for strong growth over the next 3 years, driven by new drug launches like GLP-1. However, earnings from the US generics market are expected to stay flat due to competitive pressures, a new report finds.

The domestic healthcare sector is expected to see stronger growth over the next three years, supported by new drug launches, while earnings from the US generics business are likely to remain flat for most companies, according to a report by Systematix Research.

Stronger Growth Expected in Domestic Market

The report stated that growth in India's domestic medicines market is expected to strengthen on the back of GLP-1 drug launches, with growth projected in the high single-digit range over the next three years. This is expected to support the overall expansion of Indian pharmaceutical companies, especially those with a strong presence in the domestic market. It stated. "Over the next 3 years, we expect India branded formulation growth to strengthen on back of GLP-1 launches (high single digit)."

US Market: Cautious Generics Outlook, Biosimilar Opportunities

However, the outlook for the US generics segment remains cautious. The report noted that earnings contribution from the US generics space will at best remain flat for most companies, reflecting continued competitive pressures in the market.

At the same time, biosimilar drug launches are expected to create additional growth opportunities for Indian companies in the US. However, the report highlighted that whether these opportunities translate into meaningful profitability remains uncertain due to competitive challenges.

Strategic Positioning Key for Resilience

The report stated that companies with larger exposure to branded and innovative drug portfolios are better positioned for future growth. It added that companies making targeted investments in biosimilars with less crowded pipelines and maintaining strong balance sheets are likely to remain more resilient.

Recent Performance and Market Pressures

The report further noted that the Indian healthcare sector delivered better-than-expected performance in the third quarter of the financial year 2025-26, though the overall trend remained in line with expectations. During the quarter, US sales positively surprised as the pace of erosion in high-value products was lower than anticipated. Domestic growth in India was also slightly better compared to the previous quarters, indicating steady demand in the local market. In addition, emerging markets' growth was supported by strong currency-led tailwinds, which helped improve overall performance during the quarter.

However, prices of active pharmaceutical ingredients (API), which are key raw materials used in drug manufacturing, continued to remain under pressure.

Overall, the report highlighted that while challenges remain in the US generics segment, new drug launches, steady domestic growth, and emerging opportunities in biosimilars are expected to support the long-term outlook of India's healthcare sector.

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