India’s top pharmaceutical companies are sitting on their largest cash reserves in at least five years, possibly setting the stage for a new wave of global acquisitions and innovation-led investments.
The 20 companies that make up the Nifty Pharma Index held a combined cash balance of Rs 48,913 crore as of March 31, more than double from Rs 22,240 crore in FY20, data analysed by Moneycontrol shows.
In FY25 alone, the cash pile increased by over Rs 10,200 crore, data from Ace Equities shows, underscoring a decisive shift in the capital allocation priorities of the drugmakers. The focus is increasingly on expanding overseas, investing in complex therapies, and building buffers against regulatory and trade headwinds, especially in key export markets like the United States.
“This cash buildup is largely intended to support acquisition-led growth and help companies manage risks related to regulatory tariffs in the US market,” said Naveen Vyas, senior vice president at Anand Rathi Global Finance. “The US alone accounts for around 30 percent of India’s Rs 2.5 lakh crore annual pharma exports.”
The US market, long considered the most profitable for Indian generics, has turned more challenging. Indian firms are facing tighter scrutiny from the Food and Drug Administration (FDA), pricing compression from pharmacy benefit managers (PBMs), and growing geopolitical uncertainty during President Donald Trump’s second term.
On June 17, Trump renewed the tariff threat. Speaking to reporters on Air Force One on the way back from the G7 summit, Trump said pharmaceutical tariffs were “coming very soon”.
Analysts say the sector’s record cash stockpile will be critical in absorbing potential cost escalations and enabling strategic expansion.
Big-name deals signal a shift
The growing war chest has already begun translating into headline deals. Sun Pharma acquired US-listed Checkpoint Therapeutics for $355 million (approximately Rs 3,064 crore), marking its foray into immuno-oncology and specialty drugs.
Mankind Pharma’s Rs 13,768 crore acquisition of Bharat Serums reflects a push to scale up in biologics and women’s health.
These deals mark a transition in capital strategy — from debt-light conservatism to purposeful aggression. “Most pharma companies have negligible debt and generate strong operating cash flows,” said a Mumbai-based pharma analyst who declined to be named. “They're looking at M&A to sustain EBITDA margins in the 24–25 percent range, enter regulated markets or build out innovation pipelines. With valuations stabilising, strategic deals are firmly back on the table.”
Liquidity up but so is net debt
Despite the cash surge, net debt across Nifty Pharma constituents also rose in the past year — from Rs 4,014 crore in March 2024 to Rs 11,782 crore in March 2025. Analysts attribute this to targeted borrowings used for capex or acquisitions while maintaining liquidity for higher-risk, higher-reward bets.
Surya Patra, vice president – healthcare & specialty chemical research at PhillipCapital, said the financial posture reflects a long-term pivot from a generics-heavy model to innovation and differentiated therapies.
“To transition from generics to innovation, companies will need to invest heavily. Developing a biologic drug globally, for instance, could cost upwards of $200 million,” Patra said.
Sun Pharma, with its expanding specialty pipeline, is seen as a frontrunner in this transition. But others are not far behind. Zydus Lifesciences is investing in consumer health and medical devices, Dr Reddy’s has entered the nutrition space, Lupin is expanding diagnostics, and Alkem is building capacity in biologics contract development and manufacturing (CDMO).
What emerges is a clear change in the sector’s growth philosophy. Once defined by scale and cost efficiency in generic drugs, Indian pharma is now increasingly betting on complexity, branding, and diversification. The record cash balances provide both a cushion and a launchpad for this shift.
As global regulatory frameworks evolve and competition intensifies, India’s largest drugmakers appear ready to spend their way into the next phase of growth — one that may depend less on volume and more on intellectual property, clinical development and global footprint.
Whether these strategic bets yield long-term resilience remains to be seen but with nearly Rs 49,000 crore in hand, the industry is clearly preparing for a different kind of race.
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