The pharma sector is set to grow at around 10% in FY27, driven by strong domestic demand, rising contract development and manufacturing organisation (CDMO) activity and a recovery in the active pharmaceutical ingredient (API) segment, India Ratings and Research (Ind-Ra) said on Monday. The agency expects these factors to offset weakness in the US generic business, where revenues have been hit by a decline in generic Revlimid sales.
Ind-Ra said the pharma companies it tracks had a strong first quarter in FY27. Their combined revenue grew 15.9% in the April-June 2026 period, much faster than the growth recorded in the same quarter last year. But the growth was not the same across markets. Domestic sales and some overseas markets recorded strong growth, while the largest export market – the US – remained under pressure.
As per the report, the domestic market remained the main source of growth. Revenue from the domestic business of the 18 pharma companies rose 17% year-on-year in the first quarter. This growth was largely supported by mergers and acquisitions, a recovery in acute therapies and continued momentum in chronic therapies. Additionally, the domestic market got a boost from the launch of generic versions of anti-obesity drug semaglutide. Over 30 drugmakers launched the product in different formats during the quarter, including pen devices, vials and oral tablets.
The ratings agency also cited Pharmarack data to show that the Indian pharma market grew 11.5% in the quarter ended June. The growth was mainly supported by price increases and new product launches. However, the US business remained a drag on the overall performance of the companies.
“The contraction was primarily attributed to the normalisation of generic Revlimid following increased competition after patent expiry, which led to the sharp erosion of a previously high-margin opportunity,” the report noted.
It also said that major players such as Dr. Reddy’s, Cipla and Sun Pharma reported lower revenue from the generic version of the oncology drug Revlimid in the first quarter of FY27 compared with a year earlier.
Ind-Ra said that the revenue from the US market fell 1.7% in FY26, after growing 7.6% in the previous year. To be sure, the US market is an important source of revenue accounting for about 34% of the total revenue of the pharma companies analysed by Ind-Ra over the past five years.
Although the agency is expecting the US business to pick up in the current financial year on the back of new complex generic launches and patent expiries of some large brands. “Stable pricing trends and currency tailwinds could support growth,” it said.
At the same time, US FDA inspections are likely to increase in FY27, but the report does not see them causing major disruptions. The sector will also have to deal with pricing pressure in the US, tariffs, regulatory hurdles and geopolitical tensions.