The Indian pharmaceutical industry is bracing for a challenging earnings season in Q3, with expectations of muted margins due to the loss of patent exclusivity for the blockbuster blood cancer drug Revlimid in the US. Revlimid, which has generated over $100 billion in global sales, has been a significant revenue and margin driver for Indian drugmakers such as Dr Reddy’s Laboratories, Cipla, Zydus Lifesciences, and Sun Pharma. However, with the patent expiry in January 2026, these companies will have to offload their remaining quotas, leading to a decline in sales.
Analysts expect a sector-wide decline in earnings before interest, taxes, depreciation, and amortization (Ebitda) margins by 150 basis points year-on-year, with companies such as Dr Reddy’s, Cipla, and Zydus Lifesciences likely to be affected. The decline in Revlimid sales will be a significant contributor to this margin pressure, with prices expected to erode sharply as players look to offload remaining quotas. Additionally, other factors such as increased generic price competition in the US market, higher research and development (R&D) expenses, and rising selling, general, and administrative (SG&A) costs will also weigh on margins.
Despite these challenges, analysts remain optimistic about the sector’s overall revenue growth, with expectations of 8-11% growth driven by steady domestic growth and traction in other markets. Domestic sales are projected to outpace the broader Indian pharmaceutical market’s 10.1% growth, with the chronic segment showing particular strength. Companies such as Lupin, Sun Pharma, and Cipla are expected to see growth driven by their innovative medicines portfolios and recent launches.
The US market, however, is expected to be a challenge, with overall US sales projected to decline by 4% quarter-on-quarter due to lower Revlimid sales. Excluding Revlimid, US generic sales are forecast to grow by 2% quarter-on-quarter, driven by volume expansion in existing products and the benefits from recent launches. Overall, while the loss of Revlimid patent exclusivity will be a significant challenge for Indian pharmaceutical companies, their domestic growth and innovative medicines portfolios are expected to provide some resilience and drive overall revenue growth.