Pharma, Healthcare Firms Set for 11% Growth in Q4, Margins Under Pressure: HDFC Securities
Mumbai: The Indian pharmaceutical and healthcare sector is expected to see moderate revenue growth, with EBITDA margins remaining flat, in the March quarter, according to a brokerage report by HDFC Securities.
"We project sales/EBITDA growth of 11%/6% YoY for our coverage universe," the brokerage added.
The pharmaceutical companies are expected to see 10% YoY sales growth, driven by a 15% YoY increase in the India business. However, this growth will be offsby a 5% QoQ decline in the US formulations due to pricing pressures and the absence of gRevlimid sales. "EBITDA margins for the pharma segment are expected to come down (-110bps YoY), with an increase in input cost, price erosion in the US, absence of gRevlimid, steady R&D, and higher SG&A," said the report.
The hospital business is projected to grow by 15% YoY during the reporting quarter, driven by steady occupancy and ARPOBs and bed capacity addition. The diagnostics segment is expected to post 15% YoY sales growth, driven by volume increases leading to moderate margin expansion. The retail pharmacy business is expected to see strong growth, with Medplus expected to see 22% YoY growth and Apollo HealthCo expected to see steady 20% YoY growth.
"The US generics market is likely to decline QoQ due to the absence of gRevlimid sales and pricing pressures in the base business," said the report. However, there is expected to be some traction in key products such as gJynarque, gSpiriva,
The Indian pharma market is expected to have seen steady growth of 12% in Jan/Feb'26, led by strong 16% growth in the chronic segment and ~9% growth in the acute segment. "We expect our coverage universe to see 15% YoY growth in India business on the back of traction in the speciality portfolio and chronic," the brokerage said in its report.
The research report by HDFC Securities noted that margins will remain under check due to an increase in input costs, pricing pressures in the US business, absence of high margin gRevlimid, steady research and development, and higher selling, general, and administrative expenses. The Contract Research, Development, and Manufacturing Organisation business is expected to sustain its margins as new capacities mature, while the hospital business could see some pressure on lower international payor mix and new bed additions.
