Motilal Oswal predicts robust growth for Indian pharma, picks five stocks to ride the wave

Motilal Oswal Wealth Management projects the Indian pharma industry to achieve a growth rate of 9-11 percent by FY26.

Motilal Oswal Wealth Management anticipates the Indian pharma industry will likely grow at 9-11 percent in FY26, supported largely by price hikes and new launches in the domestic market alongside an increase in export demand from regulated markets.

Adding to these growth drivers, the government's production-linked incentive (PLI) scheme for the pharma industry, aimed at furthering its Make in India initiative, is expected to boost the sector by enabling the local manufacturing of 18-20 percent of imported drugs, the wealth management firm stated.

A similar optimism is felt for the hospital sector, as Motilal Oswal Wealth Management expects profitability to improve on the back of the addition of beds, increased occupancy, and improving realisation.

With expectations of robust growth for the sector already established, Motilal Oswal Wealth Management also curated a list of five stocks that investors can turn to in order to ride this bullish wave of the Indian pharma industry.

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Mankind Pharma-- The company continues to deliver industry-beating growth in the prescription business, driven by its niche portfolio and superior execution in chronic therapies.

Max Healthcare-- Motilal Oswal Wealth Management believes that the combination of brownfield, greenfield, and inorganic expansion will drive strong revenue growth for Max and pave the way for quicker EBITDA breakeven for new beds, thereby driving higher operating leverage benefits.

Lupin-- The wealth management firm highlights Lupin's strong earnings turnaround, driven by the addition of niche products in the US generics segment, industry outperformance in the domestic formulation (DF) segment, and differentiated product launches in the EU and growth markets. These improvements in Lupin's trajectory are expected to fuel its growth in the near term.

Ipca Labs-- The company has made significant efforts and is working on multiple fronts to maintain its strong earnings momentum over the next 2-3 years. Looking ahead, the wealth management firm anticipates momentum to be driven by the relaunch of products in the US market, the introduction of new offerings through both its own and Unichem’s platforms, outperformance in the domestic formulations and rest of the world (RoW) markets, and synergies developed between Ipca and Unichem’s operations.

Piramal Pharma--With enhanced enquiries on the CDMO front at the industry level in India, Motilal Oswal believes Piramal Pharma is well poised to benefit from its differentiated capabilities and capacities. Further, it is increasing its offerings in the complex hospital generics (CHG) segment through an established global network. Accordingly, the wealth management firm expects Piramal Pharma's net profit to scale up to Rs 700 crore by FY26 from Rs 56 crore in FY24.

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