India’s pharmaceutical industry is undergoing yet another structural shift. A few Indian drugmakers are now focusing heavily on biosimilars after scaling up globally in generics and expanding into chronic therapies and specialty medicines. The next big growth engine for the industry could be biosimilars, as several blockbuster biologic drugs are set to lose patent protection over the next few years.
From Generics to Biosimilars: Indian Pharma’s Next Evolution
The growth of the Indian pharmaceutical industry has been in distinct phases. Companies built global businesses in the early 2000s on the back of producing generic versions of off-patent medicines. With competition sharpening and price erosion becoming a regular feature, many drugmakers ventured into specialty therapies, complex injectables and chronic care segments where competition was relatively low, and margins were better.
The next phase of this evolution is taking shape in biosimilars. The opportunity is substantial. Biologic medicines now account for a large and growing share of global pharmaceutical spending. Several blockbuster biologic drugs worth billions of dollars in annual sales are set to lose patent protection over the next few years. One of those drugs is Keytruda, the world’s top-selling medicine, with $31.7 billion in sales in 2025.
First, it is important to understand how biosimilars differ from generic drugs.
How Biosimilars Differ From Generic Drugs
The majority of generic medicines are copies of small-molecule drugs, chemically produced pills or capsules that are relatively simple to replicate once patents expire. Biologics, by contrast, are large, complex medicines produced from living cells and are commonly used to treat conditions such as cancer, autoimmune disorders and diabetes.
Because biologics are far more complex, producing identical copies after patent expiry is virtually impossible. Instead, companies make biosimilars, drugs that are nearly identical to the original biologic and have similar safety, quality and efficacy.
But there is another problem. Biosimilars require years of research, sophisticated manufacturing plants and much larger capital commitments than generics, which can be developed with modest investment. These higher entry barriers limit the number of players, creating the potential for stronger pricing power, more durable market positions and higher profitability.
Regulatory Tailwinds
In key markets including the US and Europe, regulators have gradually simplified approval pathways for some biosimilars by placing more emphasis on analytical and manufacturing data where appropriate. This has resulted in decreased development times and costs while maintaining safety and quality standards.
This is precisely why today a handful of Indian pharmaceutical companies are investing aggressively, although commercial returns are still a few years away.
#1. Biocon: India’s Biosimilar Pioneer
Among Indian pharmaceutical companies, Biocon is arguably the strongest proxy for the biosimilars opportunity.
While most of its peers are still building pipelines and manufacturing capabilities, biosimilars have already become the company’s largest business, contributing around 60% of the Biocon group revenue in FY26.
That leadership did not emerge overnight. Biocon entered biopharmaceuticals in the late 1990s, much before biosimilars became an industry buzzword. It spent the next two decades developing research, manufacturing and regulatory capabilities before accelerating its global ambitions with the acquisition of Viatris’ biosimilars business in 2022.
Today, the company is present in more than 120 countries and is one of the top five players in the biosimilar space globally. It has built a portfolio of over 30 biosimilars and three GLP-1 products in oncology, diabetes, immunology and ophthalmology with a combined market opportunity of over $200 billion.
Biocon: Financial Performance
| Metrics | FY24 | FY25 | FY26 |
| Sales (₹ crores) | 14,756 | 15,262 | 16,927 |
| Operating Profit (₹ crores) | 3,216 | 3,254 | 3,455 |
| Operating Margin (%) | 21.8% | 21.3% | 20.4% |
| Net Profit (₹ crores) | 1,298 | 1,429 | 369 |
Total consolidated revenue stood at ₹16,927 crore, up 11% in FY26. Net profit declined sharply from ₹1,429 crore in FY25 to ₹369 crore in FY26. While FY25 profits were boosted by one-off items, the 74% drop in FY26 net profit reflects high ongoing integration costs from the Viatris acquisition.
The biosimilars business continued to outperform the broader company. Revenue grew by 15% to ₹10,431 crore, and EBITDA margin came in at 26%.
Investment Outlook
Speaking during the FY25 earnings call, Chairperson Kiran Mazumdar Shaw said the company had emerged from “a year of consolidation and transition” and was “set up for an exciting inflection point”.
Management’s optimism stems from more than just an expanding product pipeline. After several years of investing in manufacturing capacity and integrating the Viatris biosimilars business, management said major capital expenditure has now been completed, with no significant new projects planned over FY27 and FY28. Existing facilities are expected to meet demand for the next five years, allowing future launches.
There are already signs that these investments are paying off. Four of its biosimilars generated more than $200 million in annual sales across regulated markets. As new products are launched and manufacturing capacity is better utilised, the company appears well placed to convert revenue growth into stronger operating margins, improved cash generation and higher returns on capital.
#2. Aurobindo Pharma: Building the Next Growth Engine
Unlike Biocon, where biosimilars already form the core of the business, Aurobindo Pharma is steadily building what could become one of the industry’s most significant challengers. The management expects a meaningful commercial scale-up over the second half of this decade.
The numbers suggest that the foundation is already in place. Since 2018, Aurobindo has invested around $450 million in building its biosimilars platform through CuraTeQ Biologics.
Those investments have already resulted in four biosimilar approvals in Europe and two in Canada. There are multiple filings for biosimilar drugs- Omalizumab, Denosumab and Bevacizumab progressing across the US, Europe and Canada. Management expects the portfolio to expand to seven or eight marketed biosimilars across Europe and growth markets, along with two to three products in the US by 2030.
Aurobindo Pharma: Financial Performance
| Metrics | FY24 | FY25 | FY26 |
| Sales (₹ crores) | 29,002 | 31,724 | 33,653 |
| Gross Margin (%) | 56.5 | 58.9 | 59.9 |
| EBITDA Margin (%) | 20.1 | 20.8 | 20.4 |
| Net Profit (₹ crores) | 3,169 | 3,484 | 3,503 |
In FY26, Aurobindo Pharma reported 6% revenue growth to ₹33,653 crore, while gross margin has improved from 56.5% in FY24 to 59.9% in FY26, an increase of 340 basis points.
Investment Outlook
Aurobindo is targeting gross margins of 70 to 75% from its biosimilars offerings. If achieved, these margins could materially improve the group’s overall profitability.
Beyond biosimilar products, Aurobindo’s biologics contract manufacturing business, TheraNym, is building manufacturing capabilities for global pharmaceutical companies. The first 60 KL mammalian cell culture facility is expected to be commissioned by the end of 2026, with commercial revenues expected to begin in 2028.
While the biosimilars business is unlikely to materially contribute to earnings immediately, it offers Aurobindo an additional long-term growth engine beyond its traditional generics franchise. If management executes on its pipeline and commercialisation plans, the company could emerge as India’s second major global biosimilars player over the next five years.
#3. Dr. Reddy’s Laboratories: Building Multiple Growth Engines
Unlike Biocon and Aurobindo Pharma, Dr. Reddy’s Laboratories (DRL) is not banking on biosimilars alone. Instead, it is building a diversified portfolio of future growth drivers such as biosimilars, peptides, consumer healthcare and innovation-led therapies, thus decreasing its dependence on the increasingly competitive generics business.
Peptides represent another high-value opportunity among these. Peptides are small chains of amino acids used in advanced therapies (diabetes, obesity, hormonal disorders). The explosive global adoption of GLP-1 drugs such as semaglutide has caused a surge in demand for peptide manufacturing, making it one of the fastest-growing sectors of the pharmaceutical industry.
In FY26, Dr. Reddy’s became the first company to secure approval for generic semaglutide injections in Canada, launched the product in India, and received approval for generic semaglutide tablets. Its Biologics License Application (BLA) for the Abatacept biosimilar was accepted for review by the US FDA and is targeting launch in late 2026.
Abatacept, sold under the brand name Orencia, is a biologic medication used for autoimmune disorders and has generated $3.7 billion in annual sales in 2025.
Dr. Reddy’s Laboratories: Financial Performance
| Metrics | FY24 | FY25 | FY26 |
| Sales (₹ crores) | 28,011 | 32,644 | 33,700 |
| Operating Profit (₹ crores) | 7,933 | 8,547 | 6,454 |
| Operating Margin (%) | 28.3% | 26.2% | 19.2% |
| Net Profit (₹ crores) | 5,578 | 5,725 | 4,158 |
In FY26, revenue grew only 3% to ₹33,700 crore, primarily due to price erosion in the US generic business. Higher material costs also weighed on profitability. Operating margin declined from 26.2% in FY25 to 19.2% in FY26.
For investors, biosimilars should therefore be viewed as one pillar of a broader strategy rather than the sole investment thesis. Management has identified peptides, biosimilars, consumer health and innovation as its key future growth drivers, positioning the company to participate in multiple structural shifts reshaping the global pharmaceutical industry.
#4. Zydus Lifesciences: Balancing Biosimilars with Innovation
While most Indian pharmaceutical companies are focusing on replicating blockbuster biologic drugs, Zydus Lifesciences is pursuing a broader strategy that combines biosimilars with proprietary drug discovery.
Today, the company has a pipeline spanning launched and development-stage biosimilars alongside seven novel products, reflecting its ambition to move beyond the traditional generics business.
In FY26, Zydus initiated Phase III clinical trials for its second biosimilar antibody-drug conjugate (ADC) in India, while also advancing two novel biologic candidates. More importantly, it completed the clinical development of its pembrolizumab (Keytruda) biosimilar candidate for the US market, positioning itself for one of the largest biosimilar opportunities expected over the next few years.
Unlike conventional biosimilars, ADCs combine a monoclonal antibody with a potent anti-cancer drug, allowing medicines to target cancer cells more precisely while limiting damage to healthy tissues. These therapies are among the fastest-growing segments within oncology and carry significantly higher technological barriers than traditional generic medicines.
Zydus Lifesciences: Financial Performance
| Metrics | FY24 | FY25 | FY26 |
| Sales (₹ crores) | 19,547 | 23,241 | 27,148 |
| Gross Margin (%) | 68.1 | 72.7 | 73.1 |
| EBITDA Margin (%) | 27.5 | 30.4 | 31.2 |
| Net Profit (₹ crores) | 3,851 | 4,525 | 5,040 |
In FY26, Zydus reported its strongest performance with revenue growing at 17% to ₹27,148 crore. The gross margin has steadily improved to a record 73.1%.
For investors, Zydus represents a different way to play the biologics opportunity. Rather than relying solely on biosimilars, the company is building a portfolio across biosimilars, novel biologics, and New Chemical Entities (NCEs), creating multiple avenues for long-term growth as the global pharmaceutical industry shifts toward more complex therapies.
| Company | Investment Thesis | Current Position | What to watch next |
| Biocon | India’s most established biosimilars player with global commercial scale | Biosimilars contribute 60% of group revenue; portfolio of 30+ biosimilars and three GLP-1 products | New launches, operating leverage after capex cycle, Keytruda opportunity |
| Aurobindo Pharma | Rapidly expanding biosimilars platform through CuraTeQ | Invested $450 million since 2018; four approvals in Europe and two in Canada; targets 7–8 biosimilars globally and 2–3 in the US by 2030 | Omalizumab and Denosumab filings, STADA commercialization, TheraNym biologics CDMO ramp-up |
| Dr. Reddy’s Laboratories | Building multiple future growth platforms beyond generics | Investing in biosimilars, peptides and innovation; US FDA accepted BLA for abatacept biosimilar; expanding semaglutide portfolio | Biosimilar commercialization, peptide portfolio expansion, specialty business growth |
| Zydus Lifesciences | Combining biosimilars with proprietary drug innovation | Advancing biosimilars alongside seven novel products; completed US clinical development of pembrolizumab biosimilar | Regulatory progress for pembrolizumab biosimilar, ADCs, novel biologics |
The Next Few Years Will Be Crucial
Since meaningful biosimilar revenues are still a few years away, current financials reveal only part of the story. Valuations offer a better indication of how the market views each company’s ability to execute.
P/E Multiple Trend of Pharma Companies
| Company | P/E | 5-yr Median PE | Industry PE |
| Biocon | 183.0 | 48.7 | 34.9 |
| Aurobindo Pharma | 25.6 | 19.2 | 34.9 |
| Dr Reddy’s | 25.9 | 20.0 | 34.9 |
| Zydus Lifescience | 20.9 | 21.4 | 34.9 |
Valuations highlight how differently the market views execution risk. Biocon already trades at a steep premium to both its five-year median P/E of 48.7x and the industry average of 34.9x, reflecting investor confidence in its established biosimilars franchise and commercial execution. Aurobindo Pharma, Dr. Reddy’s, and Zydus Lifesciences continue to trade below the industry levels, suggesting investors are still waiting for their biosimilar investments to translate into meaningful earnings. For these companies, successful product launches and regulatory approvals over the next few years could become important re-rating catalysts.
Biosimilars represent one of the largest structural opportunities available to Indian pharmaceutical companies today. But unlike traditional generics, success will depend less on filing more products and more on scientific capabilities, manufacturing excellence and flawless execution. The next two to three years will reveal which companies can translate years of investment into durable earnings growth.
As pharma companies move into the biosimilars segment, add these stocks to your watchlist and monitor how they execute on their long-term growth plans.
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Deepan Datta has spent over a decade studying stocks and mutual funds. His passion is to uncover interesting stories in the financial markets and share them through his writings with investors at large. He is focused on delivering clear, easy to understand and research-backed insights. Deepan began his career as a Research Associate at S&P Global, where he developed a strong foundation in financial research and data analysis.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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