Domestic Market Delivers Six Straight Months of Double-Digit Growth
The most consistent foundation for the sector's performance has been domestic demand. According to ETPharma, the Indian Pharmaceutical Market (IPM) recorded 13.3% YoY value growth in June 2026, extending its run of double-digit growth as chronic therapies and new product launches continued to support demand.
A new contributor to this domestic strength has been the GLP-1 therapy category. According to Pharmarack, monthly sales of GLP-1 drugs eased to ₹227 crore in June 2026 from a record ₹236 crore in May, following a sharp jump from ₹180 crore in March and ₹218 crore in April after semaglutide lost patent protection. Despite the MoM decline, Pharmarack expects the GLP-1 segment to grow by 111% in CY26, making it one of the fastest-growing therapy categories in the Indian pharmaceutical market.
CDMO Outsourcing Wave Rewards India's Specialty Manufacturers
Apart from domestic consumption, another key structural factor behind the bullish forecast for 2026 is the ongoing trend of increasing globalisation of pharmaceutical production moving towards India. The western-based drug manufacturers are increasingly outsourcing their manufacturing facilities away from China, while the combined bioequivalence studies and dossier filing process in India has cut down time from 36 months to 18 months.
According to BusinessLine, the CDMO and API segment is projected to deliver 9.9% YoY revenue growth in Q1 FY27, supported by increasing requests for quotations from global pharmaceutical companies and a healthy order book.
This can be seen through the performance of the best-performing pharma stocks in the year. Laurus Labs has risen 64% YTD, Sai Life Sciences by 49%, and Gland Pharma by 50% on account of their strong exposure to contract manufacturing and sterile injectables. In its Q1 FY27 result announcement, Laurus Labs posted a revenue of ₹2,026 crore, which is 29% higher than the previous year.
US Tariff Roadmap Shifts Focus to Long Term
The uncertainty in the US trade policy remained one of the key factors affecting Indian pharmaceutical stocks up to late 2025 and early 2026. Although the Section 232 proclamation by US President Donald Trump provided exemption from tariffs on generic drugs, biosimilars, and their ingredients, in July 2026 the government announced a phased approach to imposing tariffs. According to the strategy, the import of generic drugs will enjoy 0% tariff rates for two years starting from August 1, 2026, after which a 100% tariff will be imposed for one year starting from August 2028, followed by a 200% tariff.
While the suggested tariffs pose long-term challenges for India, the two years free from such tariffs will provide Indian producers with some visibility in their largest export market. The exports of Indian medicines to the US were valued at $9.7 billion in 2025, constituting around 38% of the overall pharmaceutical exports worth $25.8 billion.
Wockhardt and Aurobindo Broaden the Rally.
The rally has also extended beyond companies benefiting from the CDMO opportunity. Wockhardt, up 41% YTD, has attracted investor interest on the back of its novel antibiotic pipeline, while Aurobindo Pharma, up 31% YTD, continues to strengthen its higher-margin injectables and biosimilars business through its Eugia division alongside its established generics franchise.
About the Nifty Pharma index
The Nifty Pharma index tracks the performance of 20 pharmaceutical companies listed on the National Stock Exchange of India. It is computed using the free-float market capitalisation methodology and is reviewed semi-annually. Its largest constituents include Sun Pharmaceutical Industries, Divi's Laboratories, Dr. Reddy's Laboratories, Cipla, Laurus Labs, Lupin, Torrent Pharmaceuticals and Aurobindo Pharma, representing India's leading generics, specialty pharmaceutical, API and contract manufacturing companies.
