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Q4FY26 Pharma earnings trend – domestic formulations & Ex-US exports aid the overall US slowdown

ICICIdirect Research 29 May 2026 DISCLAIMER

The trend emerging from Pharma Q4FY26 numbers indicates traction in the domestic formulations and other global branded generics even as US portfolio slowed down.
Sales of the sample group (Sun, DRL, Torrent and Cipla) grew 4% YoY to ~₹32,668 crore, primarily driven by India formulations and pulled down by US geography.    
India branded formulations grew ~16% YoY to ~₹11,624 crore, driven by volume growth and price hikes. Companies are bearing fruits of increased patient volumes, higher offtake of high-value brands (diabetic), increased penetration of players in to tier II-VI towns via MRs and continued traction from chronic therapies in general and Cardiology / Diabetology in particular.
US portfolio ~de-grew 21% YoY to ₹ 7,766 crore impacted by price erosion and higher previous year base due to the blockbuster cancer drug gRevlimid and selective one-offs in respective companies.
Consolidated EBITDA for the sample de-grew ~17% YoY to ~₹6947 crore and the margins stood at 21.3% down ~530 bps YoY. The margins declined YoY due to higher R&D costs, SG&A expenses and lower contribution from high margin complex products in the US.
The companies are extensively focusing on India formulations being a stable growth / high margin low hanging fruit with higher capital allocation (Torrent JB deal). For the US, the companies are putting significant emphasis on specialty and complex products including biosimilars (Sun-Organon acquisition) and the launches lined up from FY27 onwards.
With significant cash at their disposal, even after considering the future investments, we can expect small ticket M&A deals in the near future.
We have a BUY rating on Torrent Pharma (Target ₹5100), Cipla (Target ₹1625) and DRL (Target ₹1460) and HOLD rating on Sun Pharma (Target ₹1985) with a wait and watch for Organon integration. 

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