Cough syrup crisis, US trade heat and R&D breakthroughs define Indian pharma’s in 2025

pharma

• Indian pharma fell 1.5% in 2025, underperforming Sensex due to sector pressures.
• Cough syrup deaths led to stricter regulations and removal from OTC access
• Glenmark and Wockhardt reach key innovation milestones with global deals, approvals

Did our AI summary help?

India’s pharmaceutical sector concluded a tumultuous 2025 — buffeted by global trade skirmishes, domestic safety crackdowns, and breakthroughs in innovation — yet poised for a strategic rebalance heading into next year.

How did pharma perform?

Not great. In 2025, the BSE Healthcare Index which is represented by mostly pharma companies underperformed the Sensex, declining approximately 1.5% year to date as of late December, compared to Sensex's positive 8.36% annual gain.

Healthcare lagged amid sector-specific pressures, while the broader market benefited from overall economic resilience into year-end.

Pharma dodges Trump tariff bullet in 2025

In mid‑2025, President Trump threatened up to 25% tariffs and 25% penal tariffs for importing Russian oil on Indian pharma exports, endangering a sector that sends $8–9 billion worth of drugs annually to the US market. While generics were initially exempted, the move rattled industry leaders. Analysts warned that higher duties could cripple India’s competitive edge and prompt US buyers to seek alternative suppliers. In the end, generics were exempted, as Trump administration realised the tariffs to be inflationary on their citizens. Also industry inflows began redirecting away from commoditised generics toward complex formulations and specialty injectables, signaling a long-term defensive pivot.

Cough syrup contamination spurs regulatory overhaul

A wave of at least 20 child fatalities linked to contaminated Indian-made cough syrups this October triggered a national outcry. Investigations found industrial chemicals like diethylene glycol in syrups, widely used in South Asia and Africa. In response, the government removed cough syrups from over-the-counter (OTC) access and tightened manufacturing protocols, aiming to restore global regulatory confidence and protect vulnerable populations.

Innovation takes spotlight

In a defining moment, Glenmark’s Switzerland‑based arm, Ichnos Glenmark Innovation, struck a $700 million upfront licensing deal with AbbVie in July for its lead oncology candidate ISB‑2001, a trispecific antibody in Phase I trials targeting multiple myeloma. The agreement could escalate to $1.2 billion with milestones, signaling a watershed moment for Indian biotech and demonstrating that global R&D partnerships are feasible. Glenmark was propelled to record highs and reclassified from a generics player to an innovation contender.

Wockhardt made history in December 2025 when the USFDA accepted its New Drug Application (NDA) for Zaynich, making it the first Indian pharmaceutical company to have a New Chemical Entity (NCE) NDA approved for review in the U.S. The antibiotic has also received Fast Track designation, underscoring its potential to tackle hard-to-treat, drug-resistant infections. USFDA is expected to take decision on approving it by mid of 2026,

The government also announced some of the key initiatives such as the announcement of Research, Development, and Innovation (RDI) scheme and the PRIP scheme for robust R&D and novel drug delivery systems

US business offsets domestic momentum

Amid challenges abroad, Indian pharma’s US-export revenue—roughly 30–45% of total sales for top players—remained robust, driven by a boom in complex generics launched, despite the loss of exclusivity of cancer drug Revlimid for some large pharma companies. Domestic formulations also saw 8–10% growth in FY25, with chronic therapies leading the charge, while companies broadened their R&D thrust to cushion against trade headwinds.

Looking Ahead to 2026

Expect 2026 to be a balancing act between global expansion and domestic integrity. Key themes to watch out include whether India secures exemptions or bilateral pharma carve‑outs from U.S. tariffs as negotiations intensify amid broader trade talks.

Ongoing ramp-up in drug-quality oversight, advanced testing, and supply-chain traceability aims to prevent future tragedies and rebalance OTC drug protocols.

Glenmark’s deal may spark similar tie-ups, while drugmakers like Biocon, Sun Pharma, and Dr Reddy’s continue scaling their biosimilars and complex-drug pipelines. Wockhardt’s antibiotic and biologics focus could yield world-firsts.

With growing US patent expiries, Indian firms are shifting from volume-based generics to value-added specialty, injectables, and CDMO segments — a potential hedge against trade and pricing volatility.

Also 2026 would be an action packed year in terms of the generic launches of weight loss drug semaglutide in India and many other markets, as patents are expected to expire in many countries in 2026.

“The year 2025 has been a significant one for the Indian pharmaceutical sector. The sector witnessed several novel launches, collaborations, digital progression and structural reforms," said Satish Reddy, Chairman, Dr. Reddy’s Laboratories.

"The year also witnessed remarkable progress in public health, with improved access to critical therapies. Further, the Next-Gen GST implementation underscored the industry’s commitment to affordability and patient-centric care and the reduction in the tax rates of life-saving drugs has benefitted many patients in India. As India steps into 2026, with innovation emerging as the defining force for the next phase of growth, the outlook for the sector looks positive," Reddy said.

"Indian pharma stands at a defining moment. In the past 25 years, the industry has grown from $3 billion to $60 billion. The next 25 years will be shaped by innovation, quality, and access. From 2026 onwards, the coming five years will be critical in terms of execution — translating policy momentum into measurable gains for India’s ambition to become a $450–500 billion industry by 2047 and establish itself as a global life sciences innovation hub," said Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance - the industry body that represent large homegrown Indian pharma companies.