India’s healthcare and pharmaceutical landscape is heading for a clear divergence in performance, according to Amey Chalke, Pharma Research Analyst at JM Financial. In an interview with ET Now, Chalke said the sector is witnessing strong traction in hospitals and CDMOs, while large generic pharma companies may face earnings pressure from FY27 onward.
Tariff worries already in the price
Chalke noted that recent tariff concerns from the Trump administration have impacted valuations of branded and specialty pharma exporters, but the earnings impact is likely limited.
Many branded players, he said, have manufacturing presence in the US, which helps mitigate tariff risks. “We remain positive on companies supplying branded products from India to the US,” he added.
Q2 earnings: Hospitals and CDMOs outperform
India’s hospital space continued its leadership streak in Q2, reporting 16–17% revenue growth and 17–18% EBITDA growth, outperforming pharma peers that posted revenue growth of 11–12%.
Chalke reaffirmed his pecking order:
1. Hospitals
2. CDMO (Contract Development & Manufacturing) players
3. Generic pharma companies
China+1: A structural tailwind for Indian CDMOs
Dispelling concerns over sustainability of the China+1 opportunity, Chalke said the trend is structural, not cyclical.
Indian CDMO firms, he said, are poised for 15–20% revenue CAGR, driven by commercial project ramp-ups. Large CDMOs, he added, will benefit the most—as seen in the Chinese market where bigger players gained disproportionate growth.
Hospitals with improving EBITDA per bed will lead
Within hospitals, he advised focusing on companies where EBITDA per bed is improving and where the city mix is shifting toward higher-paying markets.
He also recommended players trading at discounts to sector leaders.
Generics face weak FY27 despite strong near-term numbers
While many generic pharma companies posted strong Q2 results, Chalke warned that FY27 could be weak as key high-margin opportunities fade and competition intensifies.
“Near-term momentum is strong, but earnings decline is likely after two or three quarters,” he said.
India’s global positioning remains strong despite tariffs
Despite uncertainty from US tariffs and the BIOSECURE Act, Chalke believes India’s pharma advantage remains intact, backed by strong cost efficiencies and export capability.
Generic exports to the US and non-US markets will continue growing, aside from temporary product-specific disruptions like Revlimid, he added.
From tablets to biosimilars: India is moving up the value chain
Chalke highlighted that Indian pharma has already transitioned from simple oral solids to biosimilars, complex injectables, and inhalers, reducing the threat from low-cost Asian competitors.
Post Q2, earnings estimate changes across the sector are minor—within a 0% to 5% range, indicating no major recalibration is needed.
Source Name : Economic Times