Healthcare companies in India are expected to post high single-digit revenue growth in the fourth quarter of FY26, according to a report by Systematix. However, profitability is likely to come under pressure, with margins tightening across the sector.
The report estimates median revenue growth at around 12% year-on-year, while EBITDA growth may remain muted at about 3.6%. More notably, net profits are projected to decline by nearly 14%, largely due to specific product-related challenges.
A key factor behind the earnings dip is the loss of exclusivity for gRevlimid, which had been a significant revenue contributor for companies like Dr. Reddy’s Laboratories, Zydus Lifesciences, Cipla, and Sun Pharmaceutical Industries. Among these, Dr. Reddy’s is expected to face the sharpest decline as the drug’s contribution to its earnings phases out completely.
Additionally, Cipla may be impacted by supply disruptions related to Lanreotide, while Lupin and Zydus could experience margin pressure due to settlements involving mirabegron-related royalty payments.
External factors are also adding to the uncertainty. Ongoing geopolitical tensions, particularly the US–Iran conflict, may lead to higher freight and raw material costs, offsetting some benefits from a stronger USD/INR exchange rate. If these tensions persist, cost pressures could intensify further, especially as API manufacturers pass on increased input costs.
On the regulatory front, Indian authorities are tightening oversight of fast-growing therapies for weight loss and diabetes, especially GLP-1 receptor agonists. The Indian Pharmacopoeia Commission has been tasked with closely monitoring adverse reactions to ensure drug safety, particularly as more affordable generic versions enter the market.
Overall, while revenue growth remains steady, the quarter is expected to reflect margin compression and earnings pressure, driven by both industry-specific challenges and global economic factors.
With inputs from IANS