Indian pharma sector to grow 9-11% in FY26: From Lupin to Max Healthcare—Top 5 stock picks by Motilal Oswal for 2025

The Indian pharmaceutical industry will likely grow 9-11 per cent in 2025-26 (FY26), led by price hikes, new domestic launches, and increased export demand from regulated markets. The centre's production-linked incentive (PLI) scheme for the pharma industry enables 18-20 per cent of imported drugs to be manufactured locally. According to Motilal Oswal Wealth Management, analysts expect the profitability of hospitals to improve due to the addition of beds, increase in occupancy, and improving realisation.

In the pharma sector, 9-11 per cent revenue growth is anticipated for FY25 and FY26, buoyed by digital adoption, greater internet access, and expanded reach in Tier-I and Tier-II cities. The leading domestic brokerage has curated a basket of the top five stocks from the pharmaceutical/healthcare space that can benefit from the strong growth potential in the industry. The top five pharma stock picks for 2025 by Motilal Oswal Wealth Management are as follows:

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Top 5 pharma stocks to buy in 2025
 

• Mankind Pharma: According to Motilal Oswal, Mankind Pharma continues to deliver a better growth rate than the industry in the Rx-prescription business, supported by a niche portfolio and superior execution in chronic therapies.

• Max Healthcare: The brokerage states that a combination of brownfield, greenfield, and inorganic expansion will drive strong revenue growth and pave the way for quicker EBITDA breakeven for new beds, thus delivering higher operating leverage benefits.

• Lupin: Motilal Oswal said Lupin has shown 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/growth markets.

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• IPCA Laboratories: The brokerage states IPCA is working on multiple fronts to maintain its strong earnings momentum over the next 2-3 years. The momentum will be driven by: 1) relaunch of products in the US market, 2) new offerings through its own site and Unichem sites, c) outperforming the industry in DF/ROW markets, and d) building synergy between IPCA and Unichem’s operations.

• Piramal Pharma: With enhanced inquiries 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. It is increasing its offerings in the CHG segment through an established global network. Accordingly, analysts expect its net profit to increase to ₹7 billion by FY26 from ₹560 million in FY24.

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Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.