Exports and domestic demand to drive steady growth for pharma SMEs in FY26
- IBEF
- November 25, 2025
Export demand from regulated and semi-regulated markets is expected to drive revenue growth for India’s pharmaceutical sector in FY26, supported by new product launches and drug shortages in the United States (US) and European markets. Domestic demand is projected to remain steady, with existing products seeing modest price increases, while new launches will further aid revenue expansion. This environment is particularly favourable for small and medium enterprises (SMEs), which contribute about one-third of the sector’s revenue by focusing on formulations using less complex molecules. SMEs benefit from their strong value-chain presence and their role as contract manufacturers for larger pharmaceutical companies. The segment is estimated to have grown 7-9% in FY24, driven by export-led momentum in the Ahmedabad, Mumbai, and Baddi clusters, while stable domestic demand supported the Indore and Chennai clusters.
SMEs are estimated to have maintained a 7% growth rate in FY25, with exports of formulations and bulk drugs accounting for around 46% of their business. Key chronic therapeutic areas, including cardiac and neuro, along with dermatology and gastrointestinal treatments in acute therapy, continued to support performance, with this momentum extending into FY26 due to price increases and new product introductions. A critical development requiring close monitoring is the sector’s need to comply with the revised Schedule M by December 2025, which could create financial stress for SME manufacturers. According to Crisil Ratings, this may result in business closures and formulation shortages despite the segment’s broadly stable financial position.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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