Pharma Sector Sees Modest Growth Amid US Headwinds; Sun Pharma, Cipla Among ICICI Securities' Top Picks

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ICICI Securities Report

We anticipate growth slowing down for pharma companies in Q2 FY26E. Our coverage companies will likely report modest growth of 7.0%/5.1%/5.1% YoY in revenue/Ebitda/PAT.

We expect US business revenue to decline 0.7% YoY, as companies have started facing pricing pressure in gRevlimid. Aggregate India sales of our coverage are expected to grow at a slower pace of 7.5% YoY, at Rs 240 billion, due to a transitory impact of de-stocking on account of the revision in GST rates.

We remain cautious on the near-term outlook for the sector, considering uncertainties surrounding tariffs in US, loss of exclusivity for key products, and National List of Essential Medicine price revision in India in 2026.

Sun Pharma, Cipla, Aurobindo Pharma, Piramal Pharma, Alkem Laboratories, Cohance Lifesciences and OneSource are our top picks in the sector.

Key risks

Tariffs on US shipments, loss of exclusivity in key products, adverse outcome of regulatory inspections and inclusion of more products under NLEM in India.

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