Cipla To Sun Pharma: Here Are HSBC's Top Pharma Stock Picks

HSBC has identified its top picks in the Indian pharmaceutical sector, maintaining a "buy" rating on Cipla Ltd., Sun Pharmaceutical Industries Ltd., Lupin Ltd., Torrent Pharmaceuticals Ltd., and Aurobindo Pharma Ltd.. The firm highlights these stocks for their solid growth potential in both domestic and international markets.

HSBC believes the loss of gRevlimid sales from January 2026 is already priced into the valuations for Cipla and Sun Pharma. The firm sees minimal risk of negative earnings surprises for these companies. The entry of Indian pharma companies into the GLP-1 drug market is expected to bolster long-term growth prospects, although revenue realisation from these efforts may take time.

The brokerage's analysis noted a favourable risk-reward profile for its preferred names, supported by robust fundamentals and strategic positioning in high-growth markets.

Stable generic pricing and the execution of key product launches in the US are expected to drive performance in 2025. It is also anticipated to be the peak year for gRevlimid sales, with the Indian pharma market projected to grow in high single digits, fuelled by price increases and new product launches. Increasing focus on complex generics and GLP-1 drugs, such as liraglutide, is also seen as crucial for sustaining growth in the US market.

Additionally, improving biotech funding and strategic diversification in the contract development and manufacturing organisation segment are expected to attract more proposals and partnerships.

• Regulatory headwinds from adverse FDA outcomes and intellectual property challenges on critical products.

• Rising raw material and logistics costs due to geopolitical uncertainties.

• Muted volume growth in the domestic market and pressure on margins from increased research and development and operational costs.