The Indian Active Pharmaceutical Ingredients (API) market in 2025 was valued at US$14.2 billion and is expected to grow at a CAGR of 8.5% to reach US$21.46 billion by 2030. In contrast, the global market is expected to grow at a CAGR of 6.6% to reach US$198.4 billion by 2030.
Briefly about APIs: they are the core components responsible for the therapeutic effect of medicines. APIs form the base for drug formulation and determine its strength, dosage, and effectiveness.
The demand for APIs is growing every year, driven by rising chronic diseases, ageing populations, and the proliferation of generic drugs. Moreover, countries such as the USA and those in Europe rely on imports to meet 60–80% of their API requirements. India is set to capitalise on this growth through its lower labour costs, strong chemical synthesis capabilities, and economies of scale. The government is also focusing on boosting domestic API capacity through the ₹6,940 crore Production Linked Incentive (PLI) scheme, which also covers bulk drugs.
With APIs ready to dominate the global market, I have covered three companies beyond Aurobindo Pharma, Divi’s Laboratories, Dr Reddy’s Laboratories, and Sun Pharma Industries that have the potential to capture upcoming API opportunities.
3 Pharma Players Strengthening API Global Supply Chains
#1 Laurus Labs: The CDMO & API Powerhouse
With 20 years in business, Laurus Labs operates across APIs, finished dosage forms, biologics, and Contract Development and Manufacturing Organisation (CDMO) services. The company is also expanding its footprint in biotechnology, cell, and gene therapies.
Currently, the company operates 8,000 kilolab reactors, nine sites for CDMO activities, produces 10 billion drug products, maintains 240 kilolab fermentation facilities, and employs a team of 1,428 scientists.
The company has announced total capital expenditure of ₹3,600 crores for FY22 to FY26. Of the given figures, 77% is allocated for CDMO and API, with the remaining amount allocated for drug products.
Supporting the growth of Laurus Labs, the company has been allocated 532 acres of land by Andhra Pradesh to build a state-of-the-art pharmaceutical complex located near its current manufacturing facilities in Vizag. Laurus has also proposed an investment of over ₹5,323 crores in future for pharmaceutical manufacturing and expanding R&D facilities.
The company has also invested ₹17.7 crore in Aarvik Therapeutics to access next-gen Antibody-Drug Conjugates (ADC) technology. To improve its CDMO operations, Laurus Labs has announced the amalgamation of LSPL, excluding LSPL’s Unit-1 (API manufacturing). The merger will occur without the issuance of new shares and without the winding up of LSPL.
To reduce electricity costs and contribute towards ESG, a few months ago, Laurus acquired a 26% stake in Kurnool Renewables for ₹35 crores.
Laurus has recently announced its Q2 FY26 results. The revenue for this period stood at ₹1,653 crore, representing a 35% year-on-year increase and a 5.3% quarterly increase. The net profit also increased from ₹20 crores to ₹194 crore on a year-on-year basis. The company has also maintained a healthy dividend payout of 19.5%. A healthy cash flow of ₹602 crores from operating activities as of March 2025 is another positive point for investors.
Laurus Labs 5-Year Financial Performance
| Particulars | FY21 | FY22 | FY23 | FY24 | FY25 |
| Sales (₹ in crores) | 4,814 | 4,936 | 6,041 | 5,041 | 5,554 |
| Operating Profit (₹ in crores) | 1,552 | 1,424 | 1,592 | 779 | 1,055 |
| Net Profit (₹ in crores) | 984 | 832 | 793 | 162 | 358 |
| EPS (₹) | 18.3 | 15.4 | 14.7 | 2.9 | 6.6 |
Trading at ₹975.4 as of November 3, 2025, Laurus Labs’ share price increased by 61.9% in six months and 97.8% in a year. The five-year returns stood at 219.8%. Promoters’ holdings remained almost constant at 27.6%, while FIIs slightly raised their holdings by 0.5% to 26.17% in the September quarter.
Based on Laurus’ performance, DAM Capital maintained a ‘Buy’ rating in October 2025 and revised the target price to ₹1,083.
Reasons to include Laurus include its strong track record in antiretroviral (ARV) APIs and formulations, which have helped it build deep regulatory expertise across USFDA, World Health Organisation (WHO), and EU markets. Laurus also benefits from backward integration and process chemistry strength, which improve its supply chain control and operational agility.
Zydus Lifesciences: A Diversified Giant Eyeing API Expansion
With roots tracing back to the 1950s, Zydus Lifesciences’ product line is categorised into India formulations, biologics, and generics. It caters to a wide range of customers through its 30 manufacturing plants and research facilities, located not only in India but also in countries such as Germany, Brazil, and the USA.
At present, only 2.4% of the company’s business comes from the API segment, but the company has plans to expand in this area. The major business of Zydus Life comes from US formulations, which account for 49%, followed by Indian formulations, which contribute 37%, and international market formulations, which contribute 11% to the total business.
Zydus Life has secured a Notice of Compliance (NOC) from Health Canada for Liothyronine tablets used to treat hypothyroidism. The approved products will be manufactured at Zydus’ Ahmedabad SEZ facility. According to IQVIA MAT data (June 2025), Liothyronine tablets generated annual sales of CAD 10.9 million in Canada.
Almost a month ago, the company received US Food and Drug Administration (USFDA) approval for Deflazacort oral suspension. Innovating in medical science, Zydus Lifesciences’ wholly owned subsidiary, Zydus Pharmaceuticals (USA) Inc., has launched ‘ZyVet,’ the first approved generic of furosemide tablets meant for animals. Expanding its client list, Zydus Life signed a pact with Synthon BV to supply ozanimod capsules meant for treating multiple sclerosis.
Another notable approval that Zydus Lifesciences received was from the USFDA for prucalopride tablets, which are used to treat idiopathic constipation. To give an idea of the revenue potential following this approval, prucalopride’s annual sales in the USA are approximately $186.8 million, according to the IQVIA MAT (June 2025) report.
Other key approvals that the company has received, which can boost its sales figures, include a NOC from Health Canada for ZDS-Varenicline tablets, a USFDA tentative nod for Ibrutinib and Rifaximin tablets, and Celecoxib capsules.
In Q1 FY26, Zydus Life Sciences posted a revenue of ₹6,574 crore, a 5.9% increase on a year-on-year basis. The net profit for the period stood at ₹1,521 crore, an increase of ₹39 crore compared to the same quarter of the previous financial year. On a quarter-on-quarter basis, net profit surged by ₹277 crore. Zydus is also maintaining a healthy dividend payout ratio of 21.1% and has successfully reduced debtor days from 84.7 to 63.2 days. As of March 2025, the cash flow from operating activities also stood healthy at ₹6,777 crore.
Zydus Lifesciences Ltd. 5-Year Financial Performance
| Particulars | FY21 | FY22 | FY23 | FY24 | FY25 |
| Sales (₹ in crores) | 14,404 | 15,110 | 17,237 | 19,547 | 23,242 |
| Operating Profit (₹ in crores) | 3,391 | 3,342 | 3,860 | 5,384 | 7,058 |
| Net Profit (₹ in crores) | 2,185 | 4,618 | 2,092 | 3,973 | 4,673 |
| EPS (₹) | 20.8 | 43.9 | 19.4 | 38.4 | 44.9 |
Trading at ₹981.05 as of November 3, 2025, Zydus Lifesciences’ share price has risen by 13.7% in the last six months. The five-year return stood at 133.6%. Another key point is the promoters’ holdings at 75%, which have remained consistent over the last few quarters. Foreign Institutional Investors have also slightly raised their holdings by 0.2% in the September quarter compared to the June quarter.
In September 2025, Antique Stock Broking upgraded Zydus Lifesciences from ‘hold’ to ‘buy’ and revised the target price to ₹1,255 from the previous ₹1,035.
Reasons to include Zydus Life in the list are its strong R&D pipeline, leadership in global generics, and focus on vaccines and biologics.
#3 Biocon: Global Biosimilar Leader with a Generics Backbon
Founded in 1978, Biocon has a presence in over 120 countries, with more than 1,025 registered trademarks and over 1,500 patents granted to date. Its portfolio is classified into generics, biosimilars, branded formulations, and novel biologics.
In terms of business, biosimilars account for 61% of sales, CRDMOs for 22%, and generics for 17%. As part of its expansion plan, the company invested ₹205 crore in research and development.
A week ago, Biocon’s biologics arm received NOC from Health Canada for Yesintek (ustekinumab injection) and Yesintek I.V., biosimilars to Johnson & Johnson’s Stelara. The injection is used to treat plaque psoriasis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis. This marks Biocon’s entry into Canada’s immunology space.
The company has also expanded its collaboration with Civica Inc. for a new insulin glargine intended for patients in the US. In the first week of October, the company received approval for Rifaximin, which is used to treat irritable bowel syndrome with diarrhoea (IBS-D) and reduce the risk of recurrence of overt hepatic encephalopathy (HE) in adults. The drug will be manufactured in partnership with Carnegie Pharmaceuticals LLC.
Biocon has also received clearance to launch a denosumab biosimilar that will help treat osteoporosis and Xgeva, a type of bone cancer.
The company has recently inaugurated its first manufacturing facility in Cranbury, New Jersey.
Other notable events in recent months that can support the company’s growth are the launch of Nepexto, an autoimmune drug in Australia; USDA approval for the rapid-acting insulin Kirsty; approval for denosumab biosimilars in the European Union; and Central Drugs Standard Control Organisation (CDSCO) approval for Liraglutide (meant for type 2 diabetes mellitus).
Regarding Q1 FY26 financials, the company reported total revenue of ₹3,942 crore, an increase of ₹509 crore when compared to the same quarter of the previous financial year. Q1 FY26 revenue, when compared to Q4FY25, saw a decline of ₹475 crore. The dip was mainly due to seasonal moderation in biosimilars demand post-year-end inventory stocking by global partners. Additionally, the contract research and manufacturing (CRDMO) segment experienced a decline in order flow due to client budget realignments and delayed project starts.
The net profit for Q1FY26 stood at ₹89 crore, a significant 90% dip on a year-on-year basis due to the high base effect created by a one-off gain in the previous quarter, which had significantly inflated Q4 profitability.
A key positive point to note is that, considering the company’s operational efficiency and confidence in its financials, CRISIL has reaffirmed its long-term rating for bank facilities at AA+/Stable and its short-term rating at A1+.
Biocon Ltd. 5-Year Financial Performance
| Particulars | FY21 | FY22 | FY23 | FY24 | FY25 |
| Sales (₹ in crores) | 7,143 | 8,184 | 11,174 | 14,756 | 15,262 |
| Operating Profit (₹ in crores) | 1,581 | 1,793 | 2,412 | 3,216 | 3,254 |
| Net Profit (₹ in crores) | 846 | 772 | 643 | 1,298 | 1,429 |
| EPS (₹) | 6.2 | 5.4 | 3.9 | 8.5 | 8.4 |
Biocon’s share price surged by 12.3% over the past six months, while the one-year return stood at 19.9%. Since the company has started gaining traction recently, a 6.7% decline in the share price over the last five years is not a major concern for now.
Biocon has also issued a QIP of ₹4,500 crore a few months back, and the funds raised from there will be used to repay financial obligations, which also include optionally convertible debentures issued to Goldman Sachs AIF.
Based on its recent operations, in June 2025, HSBC had a positive outlook on the company and maintained a ‘Buy’ rating on the stock, revising the price to ₹380 from ₹400. In the September quarter, FIIs raised their holdings by 0.6%. In terms of DIIs, SBI MNC Fund and Nippon Life India Trustee Ltd – A/C Nippon India Pharma Fund have raised their holdings. The government has also increased its holdings to 0.03%.
Besides the positives we discussed earlier, having a strong hold in the global market through its subsidiary Biocon Biologics, especially after acquiring Viatris’ biosimilars business, which expanded its commercial footprint across 70+ countries and improved its access to developed markets like the US and EU, is another reason to include Biocon on the list. The company’s strong pipeline of monoclonal antibodies and insulin biosimilars, coupled with approvals from regulators such as the US FDA and European Medicines Agency (EMA), reinforces its credibility in high-barrier markets.
How their valuations stack up
A quick snapshot of the valuation of key names in the API segment.
| Company | Price-to-Earnings (P/E) Ratio | Price-to-Book (P/B) Ratio |
| Laurus Labs | 77.6 | 11.0 |
| Zydus Lifesciences | 21 | 4.1 |
| Biocon | 141 | 2.1 |
| Industry Median | 33.0 | 5.9 |
Coming to the valuation, among the three, Biocon appears the most attractively valued with the lowest P/B, well below the industry median. Zydus Lifesciences also trades reasonably at a P/B ratio of 4.1. However, Laurus Labs trades at a relatively high P/B of 11.0 and a steep P/E of 77.6, indicating the price may be already factoring in a strong future performance.
Consideration for Investors
While the potential of the API business seems lucrative, investors should be aware that the API business operates in a highly competitive and sensitive environment, vulnerable to regulatory changes, especially from bodies such as the USFDA and EMA.
Any delay or failure in approvals can have a direct impact on revenue. Dependence on raw material imports from China further exposes companies in this segment to supply chain disruptions and price fluctuations. Furthermore, currency volatility and pricing pressure in global generics markets can affect margins. High capital expenditure and long gestation periods also add to financial strain.
Disclaimer:
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.
Rishabh Sinha is a seasoned financial content creator with over 10 years of experience in BFSI domain. His portfolio spans over 20 of India’s most trusted financial brands. Rishabh brings depth, structure, and a reader-first approach to every piece he crafts.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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