Indian pharma sector needs price hikes, site and IP transfers to tackle US tariff uncertainty: Report

NEW DELHI: The Indian pharmaceutical industry requires price increases, site and intellectual property (IP) transfers to deal with the prevailing uncertainty in the sector amid US tariffs, according to a report by Systematix Research.

The report highlighted that tariff uncertainty continues to prevail, with companies unwilling to add capacities in the US.

It stated, “Price increase, site and IP transfers are the three tools the industry requires to deal with the tariffs.”

At the same time, raw material prices are correcting sharply in certain categories, particularly antibiotics, while customers are destocking to take advantage of lower prices. Overall, generic API prices have stabilized.

The report further noted that companies remain hopeful yet cautious around new growth avenues and product launches, which could help them offset the erosion in high-value launches.

On the CDMO front, requests for proposals (RFPs) for custom synthesis and CDMO services remain strong. Multiple companies are also eyeing GLP-1 opportunities in India and emerging markets, preparing for a day-one launch.

Meanwhile, firms continue to cautiously evaluate inorganic growth opportunities. Demand for anti-infectives in domestic markets remained weak during the quarter, while building over-the-counter (OTC) platforms continues to be a key focus area.

On the earnings front, the report stated that 1QFY26 was weak, with underperformers outnumbering outperformers. Most players recorded mid-to-high single-digit growth in India pharma (organic). However, the US geography witnessed margin pressures, as price erosion began.

Among the outperformers, Sun Pharma (SUNP) exceeded expectations due to lower operational costs. India business was strong, but US generics came in weaker than expected. Pfizer (PFIZ) saw growth returning at 7 percent, which along with lower operational costs, helped it outperform.

Similarly, Syngene (SLPA) generated higher-than-expected contribution from licensing income, leading to stronger margins.

On the weaker side, Orchid Pharma (ORCP) was impacted by an adverse hit on industry-wide cephalosporin API volumes, likely due to customer inventory destocking in anticipation of price correction.

Piramal Pharma (PLM) faced heavy pressure on its export business due to dumping by China. Dr. Reddy’s Laboratories (DRRD) saw weakness in its high-value US generic business, which impacted margins. Divi’s Laboratories (DIVI) reported in-line revenue but with slightly weak margins.

The report concluded that the Indian pharma sector continues to face near-term uncertainty, though companies are positioning themselves for long-term growth opportunities. (ANI)