Economic Review
Global Economic Review
The global economy showed surprising strength in 2025, though the second half of the year was met with more caution. While early forecasts placed global growth at 3.3%, this was later settled at 3.2% as the year progressed. Global trade dynamics were heavily influenced by the introduction of Trump tariffs, which triggered a massive frontloading of purchases in the first half of the year as businesses sought to mitigate supply chain costs and beat effective dates. Despite these trade pressures and conflicts in West Asia, the economy was supported by a massive wave of investment in Artificial Intelligence. These AI advancements began to demonstrably improve productivity and corporate margins, helping to balance out the uncertainties in global trade.
Global inflation generally moved downward in 2025, but the progress was not uniform across regions. While tighter policies and cooling job markets helped lower prices in many areas, the trend was occasionally interrupted by energy price shocks caused by the conflict in West Asia. These shocks stabilised global headline inflation at approximately 3.5% by the end of 2025, though specific emerging markets saw spikes closer to 4.4%, making the cost of living unpredictable in those regions. Despite these challenges, real household incomes began to improve, driven by a combination of falling inflation and steady wage growth. Central banks reached a turning point during the year. After a long period of high rates, many initiated measured rate cuts to support economic growth while remaining vigilant against a potential inflation rebound.
Global trade saw a healthy rebound in CY 2025, growing by 3.8%, its best performance relative to GDP in nearly a decade. While momentum was weak in the Eurozone and slowing in China, India and the US emerged as the primary drivers of global strength. Despite geopolitical conflicts disrupting energy and supply chains, the global economy remained resilient. India stood out as a top performer with an estimated real GDP growth of 7.7% in 2025-26.
Geopolitical Conflicts and Global Economic Environment
While the global economy remained resilient for most of 2025, the landscape altered dramatically following the escalation of conflict in West Asia on February 28, 2026. This event triggered the most significant energy disruption since the 1970s. The impact on the Strait of Hormuz was immediate: ship transits plummeted from 130 per day in February to just six in March 2026. This 95% collapse effectively blocked 20% of the worlds oil and 25% of its liquefied natural gas (LNG), causing a massive shock to global energy prices.
The disruption extended far beyond fuel, hitting essential manufacturing materials and agriculture.
The region is a global hub for fertilisers, accounting for roughly 30% of world urea and ammonia exports.
With the Strait closed, the supply of methanol, aluminium, and graphite also stalled, threatening both general manufacturing and the transition to green energy.
As a result, the strong trade growth of 4.7% seen in 2025 is expected to drop sharply to between 1.5% and 2.5% in 2026. These energy shocks are driving inflation back up and forcing businesses to become extremely cautious. To protect themselves, companies are now rushing to find alternative supply routes and are holding back on big investments until the situation stabilises.
Outlook
Looking ahead, the global economy is expected to follow a cautiously stabilising but uneven path. According to the IMF, global growth is projected at 3.1% in 2026 and 3.2% in 2027.
This represents a slight deceleration from 2025, primarily due to trade and energy disruptions triggered by the West Asia conflict. While advanced economies are expected to grow at a restrained pace, emerging markets led by India will continue to anchor the majority of global output.
While inflation showed signs of cooling in early 2025, global headline inflation is projected to spike to 4.4% in 2026 due to recent energy price shocks. However, as supply routes stabilise and previous interest rate hikes take hold, inflation is expected to resume its downward path to 3.7% in 2027. Advanced economies are likely to reach their targets sooner, while emerging markets face more persistent pressure from high import
costs and currency shifts. Consequently, central banks are expected to maintain a balanced approach, gradually adjusting rates to support economic growth while keeping inflation under control.
Structurally, the global economy is being reshaped by two major forces: technological innovation and energy security. The adoption of AI and automation is driving productivity gains that help offset trade-related headwinds. Simultaneously, the recent energy disruptions have accelerated the push for ‘green manufacturing and low-carbon transition planning. While geopolitical volatility remains a key risk, the global economy is broadly positioned for a period of gradual recovery, supported by private sector adaptability and strategic shifts in global supply chain architecture.
Global Growth Forecast (%)
Particulars |
2024 | 2025 | 2026 (P) | 2027 (P) |
| World Output | 3.3 | 3.4 | 3.1 | 3.2 |
| Advanced Economies | 1.8 | 1.9 | 1.8 | 1.7 |
| United States | 2.8 | 2.1 | 2.3 | 2.1 |
| Eurozone | 0.9 | 1.4 | 1.1 | 1.2 |
| Japan | 0.1 | 1.2 | 0.7 | 0.6 |
| United Kingdom | 1.1 | 1.3 | 0.8 | 1.3 |
| Other Advanced Economies | 2.2 | 3.0 | 2.6 | 2.2 |
| Emerging Markets and Developing Economies | 4.3 | 4.4 | 3.9 | 4.2 |
| China | 5.0 | 5.0 | 4.4 | 4.0 |
| India | 6.5 | 7.6 | 6.5 | 6.5 |
| Emerging Markets and Middle-Income Economies | 4.3 | 4.4 | 3.8 | 4.1 |
| Low-Income Developing Countries | 4.0 | 4.8 | 4.8 | 4.9 |
Indian Economic Review
India sustained its position as one of the fastest- growing major economies in 2025-26, reinforcing its structural momentum despite a challenging global environment. Real GDP is estimated to grow at 7.7% according to the government estimates, a significant acceleration from the 6.5% recorded in the previous year. Nominal GDP reached INR 357.14 lakh crore, reflecting a growth rate of 8.0%. The services sector remained the primary engine of expansion, growing at 9.1%, while Private Final Consumption Expenditure (PFCE) rose to account for 61.5% of the GDP, its highest share since 2012, reflecting the exceptional resilience and durability of domestic demand.
The macroeconomic environment in 2025-26 was defined by a significant easing of monetary policy. Supported by cooling inflation, the RBI initiated a series of rate cuts throughout 2025, bringing the repo rate down to 5.25% by December 2025.
This cumulative reduction of 125 basis points has substantially lowered the borrowing costs, providing a more cost-effective environment for capital-intensive expansions and R&D investments. While the RBI has maintained a pause at 5.25% in its April 2026 review to guard against global energy shocks, the overall lower interest rate regime continues to support industrial momentum and domestic credit flow.
On the fiscal front, the government maintained its consolidation path, with the revised estimate for the fiscal deficit at 4.4%, moving towards the Union Budget 2026-27 target of 4.3%. Despite global volatility, Indias Current Account Deficit (CAD) remained manageable at 1.0% of the GDP, bolstered by strong services exports and steady remittance inflows.
Indias total exports reached a historic milestone of USD 860.09 billion in 2025-26, growing 4.22% from the previous year despite global volatility. This growth was primarily anchored by the services sector, which rose 7.94% to USD 418.31 billion, while merchandise exports reached USD 441.78 billion. Key sectors like engineering, electronics, and chemicals maintained steady momentum. Specifically, the pharmaceutical sector exports for April-February 2026 reached USD 28.29 billion (up 5.6%), with India now accounting for 20% of the global generic supply. Driving this long- term structural shift is the PLI Scheme, which has now realised investments of INR 1.76 lakh crore across 14 sectors as of March 2025. The scheme has generated INR 16.5 lakh crore in output and created over 12 lakh jobs, positioning India as a globally competitive manufacturing hub.
Outlook
Indias economic outlook for 2026-27 remains resilient despite elevated global uncertainties arising from geopolitical tensions, trade fragmentation, volatile energy prices and global financial market volatility. The RBI has projected Indias GDP growth at 6.9% for 2026-27, supported by strong domestic demand, sustained public capital expenditure and improving private investment.
Inflation has remained broadly under control, with headline inflation remaining below the 4% target in the recent period. The RBI has projected an average consumer price inflation of 4.6% for 2026-27.
Continued government emphasis on infrastructure creation and capital expenditure is expected to support investment activity across core sectors, including steel, engineering and construction. Improved corporate balance sheets, rising productive capacity and sustained public investments are expected to aid demand momentum across infrastructure-linked industries.
On the external front, foreign exchange reserves remain comfortable with around 11 months of import cover, while gross FDI inflows continue to remain encouraging, supported by increasing greenfield investments across finance and technology sectors.
Going forward, continued policy certainty, fiscal consolidation, structural reforms, ease of doing business and focus on inclusive growth are expected to support Indias medium-term growth trajectory despite external challenges.
ICRA has lowered its 2026-27 GDP growth forecast to 6.2% from 7.1% and raised its CPI estimate to 4.5% from 4.0%, assuming an average crude oil price of USD95/barrel for the fiscal. However, these estimates are subject to sizeable risks; a longer conflict with average crude oil at USD105/bbl could drag the growth below 6% and push inflation above 5%.
The International Monetary Fund (IMF) has raised Indias growth forecast for 2026-27 to 6.5% from earlier 6.4%, as a sharp cut in US tariffs on Indian goods and a strong 2025-26 growth momentum are expected to offset the drag from the West Asian conflict. The IMF positions India as one of the few resilient economies in a global outlook that is increasingly shadowed by the conflict in West Asia.
A reduction in US tariffs on Indian goods, from 50% to 10%, has improved the trade outlook, and the ‘carryover momentum from a strong 2025-26 is expected to sustain activity into the next fiscal year. These positives, the IMF notes, are sufficient to offset the adverse spillovers from the ongoing war in West Asia.
Industry and Business Review
Global Pharmaceutical Industry
The global pharmaceutical industry is undergoing a structural transformation, supported by sustained innovation, changing disease profiles and broader healthcare access. Despite inflationary pressures and geopolitical uncertainty, healthcare systems have remained resilient, while demand for novel therapies supports industry growth.
Global medicine spending is expected to reach approximately USD 2.4 trillion by 2029, at a projected CAGR of 5-8%, driven by innovative therapies, established brand expansion and improving healthcare access in emerging markets. Growth remains varied, with mature markets experiencing moderation and emerging economies contributing a growing share of incremental demand.
Therapeutic innovation remains a key driver, with more than 1,000 novel active substances launched globally over the past two decades, including 394 in the last five years. However, access remains uneven, with developed markets leading in availability while low- and middle-income countries face greater constraints.
Biologics accounted for approximately 42% of new drug launches over the past five years, while specialty medicines for chronic, complex and rare conditions are expected to capture a growing share of pharmaceutical spending. The increasing adoption of biosimilars is also improving affordability and access.
Oncology, immunology and metabolic disorders remain key growth areas. Oncology leads global pharmaceutical spending, supported by continued innovation and treatment adoption, while rapid uptake of GLP-1 therapies for diabetes and obesity is reshaping metabolic care. Advances in neurology, including Alzheimers and mental health treatments, are expected to support future growth.
Global medicine volumes have remained broadly stable, growing at approximately 0.8% annually and staying largely flat on a population-adjusted basis. Developed markets have higher per capita consumption, while Asia and Latin America see faster growth as access and healthcare awareness improve. Affordability and infrastructure constraints continue to limit access in parts of Africa and the Middle East.
Spending growth is increasingly shaped by the product mix, with premium and innovative therapies driving value growth, despite moderate volumes. Developed markets benefit from product launches but face loss of exclusivity and pricing pressures, while emerging markets rely more heavily on generics and cost-effective alternatives.
Generics and biosimilars are improving access and helping contain healthcare expenditure, alongside a shift towards value-based pricing and outcome- focused reimbursement. Digital transformation is also reshaping the value chain, with data analytics, artificial intelligence and real-world evidence supporting drug discovery, clinical development, operational efficiency and patient outcomes.
The industry remains positioned for sustained growth, supported by innovation, broader access to novel therapies and evolving healthcare needs. Balancing affordability with therapeutic advancement will remain critical amid an increasingly complex healthcare environment.
Global Pharmaceutical Market (USD Billion)
Region |
2024 | 2020-2024 CAGR | 2029 | 2025-2029 CAGR |
Developed Markets |
1,421.5 | 8.2% | 1,945-1,975 | 5.5-8.5% |
Pharmerging Markets |
312.2 | 6.0% | 375-405 | 3.5-6.5% |
Other Markets |
16.1 | 1.0% | 18-22 | 2-5% |
Global Pharmaceutical Market |
1,749.8 | 7.7% | 2,355-2,385 | 5-8% |
Global Pharmaceutical Market: Share by Product Type
Region |
Original Brands (%) |
Non-original Brands (%) |
Unbranded Generics (%) |
OTC, Vaccines & Others (%) |
Total (USD Billion) |
|||||
| 2024 | 2029 | 2024 | 2029 | 2024 | 2029 | 2024 | 2029 | 2024 | 2029 | |
Developed Markets |
1,091.6 | 1,555- 1,585 | 120.6 | 135-165 | 124.6 | 120-150 | 84.7 | 95-115 | 1,421.5 | 1,945- 1,975 |
Pharmerging Markets |
88.4 | 115-135 | 106.3 | 120-140 | 41.1 | 40-60 | 76.5 | 80-100 | 312.2 | 375-405 |
Other Markets |
4.4 | 3-7 | 8.4 | 8-12 | 0.8 | 0.7-1.1 | 2.6 | 2.5-3.5 | 16.1 | 18-22 |
Global Markets |
1,184.3 | 1,685- 1,715 | 235.3 | 270-300 | 166.5 | 170-200 | 163.7 | 180-210 | 1,749.8 | 2,355- 2,385 |
Developed Markets
Medicine spending in developed markets is expected to reach USD 1,945 to USD 1,975 billion by 2029, driven by new and innovative treatments, even as generics and biosimilars increase competition. Immunology drugs see steady use, with nearly half facing biosimilar competition that is boosting access. Over time, spending is set to rise further, supported by medicines from established brands and new products.
Developed Markets: Pharmaceutical Spending and Growth
Region |
2024 | 2020-2024 CAGR | 2029 | 2025-2029 CAGR |
Top 10 Developed Markets |
1,194.5 | 8.2% | 1,635-1665 | 5-8% |
Other Developed Markets |
227.0 | 7.8% | 295-325 | 5.5-8.5% |
Total Developed Markets |
1,421.5 | 8.2% | 1,945-1,975 | 5.5-8.5% |
Growth by Region
The global pharmaceutical market is expanding across all major regions, with spending projected to grow 5%-8% annually through 2029. Growth is primarily driven by an aging global population, increased access to complex biologics in pharmerging regions, and a surge in high-value therapies for oncology and obesity.
North America, holding a dominant 48% of global market value as of 2024, is led by the US, where robust biopharma investments fuel demand for biologics and rare disease treatments. While the Inflation Reduction Act (IRA) introduces pricing pressures, the region remains the primary hub for innovation, with hospital pharmacies leading and online channels expanding chronic care delivery.
In Europe, steady growth is supported by standardised regulations and increased funding for specialty care. Germany, France, and the UK lead, driven by high demand for specialty treatments and a rapidly maturing biosimilars market, which is increasingly used to balance healthcare sustainability with innovation.
Asia Pacific remains a critical growth engine, led by China, India, and Japan. China, the worlds second- largest market, is projected to see spending reach USD 205-235 billion by 2029, as the National Reimbursement Drug List (NRDL) continues to broaden access to novel drugs. Japans market remains stable, focused on elderly care and metabolic treatments amidst ongoing price revisions.
In Latin America, the Middle East, and Africa, growth is fuelled by healthcare reforms and local production. These regions are expanding through strategic biopharma investments and rising demand for both chronic and infectious disease treatments in underserved populations.
Megatrends for the Pharmaceuticals Industry (Global)
Precision Medicine & Biologics Dominance
Biologics, gene therapies, and targeted small molecules are redefining treatment across oncology, rare diseases, and immunology, with personalised medicine approaches rapidly displacing traditional one-size-fits- all therapeutic models.
AI-Driven Drug Discovery & Development
Artificial intelligence is compressing drug discovery timelines, improving clinical trial design, and enhancing patient targeting fundamentally transforming how medicines are identified, developed, and brought to market.
GLP-1 & Metabolic Medicine Revolution
GLP-1 receptor agonists have emerged as one of the most transformative drug classes in decades, reshaping treatment paradigms for obesity and diabetes, with the global obesity medicines market reaching USD 66 billion in 2025.
US Food and Drug Administration Approvals
In 2025, the US FDAs Center for Drug Evaluation and Research (CDER) approved 46 novel drugs and Center for Biologics Evaluation and Research (CBER) cleared 12, a notable increase from the 50 approved in 2024. This cohort was characterised by a surge in precision medicine, particularly in oncology and rare diseases, alongside innovative firsts such as new oral antibiotic classes and advanced mRNA- based therapies. For 2026, approvals are projected to remain robust, with over 60 novel agents under priority review.
The ten-year period from 2015 to 2024 saw the FDA approve 184 drugs for Indias top 20 drugmakers, reinforced by 38 post-approval acquisitions that expanded major pipelines. The US continues to serve as the primary global launchpad; 42% of US-launched
Novel Active Substances (NAS) over the last five years are still pending in major European markets, highlighting a widening global access gap. In contrast, only 6% of drugs first launched in Europe have not yet been introduced to the US market.
Regulatory evolution, including the implementation of the Inflation Reduction Act (IRA) pricing frameworks and new CAR-T safety standards, continues to reshape the landscape for both innovation and long-term affordability across global economies.
58
Novel drugs were approved by the FDA in 2025, with 60 approvals expected in 2026
Drug Launch Pipeline
The global drug development pipeline has reached unprecedented levels, with over 23,000 active R&D programmes underway. The pipeline remains heavily weighted towards early-stage innovation, with approximately 18% in Phase 1, 16% in Phase 2, and 7% in Phase 3. Oncology and immunology continue to dominate therapeutic focus, now joined by a surge in metabolic health (specifically obesity). There are 72 New Active Substances (NAS) in late- stage development, with the top 20 pharmaceutical companies holding nearly 22% of these high-potential commercial assets.
A defining shift in the industry is the rise of Emerging Biopharma (EBP) companies as the primary engines of innovation. In 2025, EBPs originated 85% of the 58 NAS launches, with a record 46 of those assets commercialised directly by the originating company rather than out-licensed to larger firms. Over the 2021-2025 period, EBPs accounted for 65% of all global NAS launches, reflecting their growing capability to navigate complex clinical and regulatory pathways independently.
Despite this robust innovation, global access remains uneven. The US continues to be the dominant first-launch market, accounting for 53% of global pharmaceutical value. In contrast, other developed and emerging markets often face lags of 18 to 24 months due to evolving pricing negotiations (such as the Inflation Reduction Act impacts in the US) and diverse reimbursement hurdles. This geographical disparity remains a critical challenge in ensuring that novel therapies reach patients globally in a timely manner.
85%
Of the 53 NAS launched in 2025 originated from emerging biopharma (EBP) companies
Pharmaceutical R&D
Pharmaceutical R&D maintained its strategic centrality through 2025, with investment and dealmaking increasingly concentrated in high-value science, emerging biopharma, and AI-driven activity. While R&D funding in 2025 moderated slightly from the 10-year high of USD 102 billion recorded in 2024, it remained well above pre-pandemic levels, sustaining the multi-year rebound that has underpinned robust pipeline growth. Strategic partnerships within the biopharma sector intensified, highlighted by record-breaking deal volume between Chinese and international firms, where alliance funding reached USD 48.5 billion in 2025. This trend underscores a fundamental shift towards globalised innovation, where cross-border scientific integration is now a primary driver of R&D success.
The global pipeline continued to expand beyond a record 23,000 active programmes, anchored by oncology, obesity, immunology, and rare diseases as the dominant areas of clinical investment. Based on the current late-stage pipeline and historic success rates, an average of 70-80 NAS are projected to be launched annually over the next five years. However, clinical trial starts recorded a modest decline across most therapeutic areas in 2025, reflecting a softening in global Phase I activity. Furthermore, end-to-end development timelines increased with inter-trial intervals rising by three months reversing efficiency gains seen in prior years and underscoring the persistent productivity challenge plaguing the sector.
Artificial intelligence has emerged as a structurally important enabler across the R&D continuum.
AI capabilities are accelerating across discovery research, clinical planning, portfolio decision- making, and regulatory submissions, with AI-driven programmes demonstrating measurably improved success rates in 2025. The industrys increasing integration of AI alongside real-world evidence, adaptive trial designs, and strategic outsourcing reflects a broader commitment to compressing development timelines, improving attrition rates, and managing the rising cost of bringing novel therapies to market.
Indian Pharmaceutical Industry
Indias pharmaceutical sector continued to strengthen its standing as the worlds foremost supplier of affordable medicines through 2025, reinforcing its identity as the ‘Pharmacy of the World. India ranks third in terms of volume, meeting approximately 20% of global generics demand, with pharmaceutical exports to 191 countries in 2024, over 50% of which are directed to highly regulated markets such as the US and Europe. The sector is supported by over 3,000 companies and 10,500 manufacturing units, with an annual turnover of INR 4.72 lakh crore in 2024, and a USD 55 billion domestic market projected to reach USD 130 billion by 2030.
Affordable healthcare is becoming an expanding national reality through targeted government intervention. Under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), a total of 17,610 Jan Aushadhi Kendras have been set up across the country, with 2,202 centres opened in 2025 alone.
Up to November 2025, sales of INR 1,409.32 crore generated estimated savings of approximately INR 5,637 crore for citizens.
The Production Linked Incentive (PLI) scheme continues to serve as a transformative lever for domestic manufacturing. The PLI scheme for pharmaceuticals generated cumulative sales of more than INR 20 lakh crore, including INR 19 lakh crore in exports since inception through September 2025, with actual investments of INR 40,294 crore significantly exceeding the targeted outlay of INR 17,275 crore. The Union Budget 2025-26 allocated INR 5,268 crore for the Department of Pharmaceuticals, a 28.8% increase over previous estimates alongside INR 1,400 crore for mega bulk drug parks and INR 1,460 crore for medical device parks. Complementing these efforts, the Union Budget 2026-27 introduced the Biopharma SHAKTI initiative, positioning India as a future global biopharmaceutical manufacturing hub. Foreign investment flows into drugs and pharmaceuticals reached INR 13,193 crore in 2025 up to September, reflecting sustained international confidence in Indias manufacturing base and regulatory framework.
India is globally recognised as the Pharmacy of the World, a distinction firmly reinforced through 2025. The country remains the largest global supplier of generic medicines, accounting for 20% of the worlds generic drug supply by volume, with exports reaching over 200 countries and 55-60% of UNICEFs vaccine requirements met by Indian manufacturers.
As highlighted in the Economic Survey 2025-26, the industry is actively transitioning from a volume-driven model toward a value-driven approach, with growing emphasis on complex generics, biosimilars, CDMO services, and innovation-led growth supported by Indias position as the country with the largest number of USFDA-compliant manufacturing facilities outside the United States. The sector has attracted cumulative FDI inflows of INR 2,10,940 crore from April 2000 to June 2025, with 100% automatic FDI permitted in greenfield ventures and up to 74% in brownfield projects, ranking the sector among Indias top 10 most attractive for foreign investment. With the Biopharma SHAKTI initiative, expanding trade agreements, and a deepening biosimilars and API pipeline, India is well- positioned to advance its global pharmaceutical leadership in the years ahead.
Global Active Pharmaceutical Ingredients (API) Industry
The global active pharmaceutical ingredients (APIs) market is forecast to record a CAGR of 6.66%, from USD 219.7 billion in 2025 to USD 418.64 billion by 2035, over the projection period from 2026 to 2035. The Global Active Pharmaceutical Ingredient (API) market is expanding at a robust pace, with North America alone valued at USD 115.81 billion in 2025, representing 47.22% of the worldwide market, growing to USD 122.74 billion in 2026, at a an average of 7.26% through 2034. This growth is driven by a rising demand for biopharmaceuticals, a strong surge in demand for cost-effective generic drugs, and technological advancements in API production. Increasing incidence of chronic diseases, rising adoption of biological drugs, and expanding government initiatives for innovative drug development continue to underpin the market momentum globally.
Regionally, North America dominated the global API market in 2025, accounting for 47.22% of the market at USD 115.81 billion, driven by the rapid adoption of biological APIs and growing chronic disease burden. Europe represented 23.15% of the global market at USD 56.78 billion in 2025, supported by expanding R&D programmes across pharmaceutical and biopharmaceutical companies. Asia Pacific contributed 21.75% at USD 53.35 billion in 2025 and is projected to outpace North America and Europe, registering the highest CAGR through the forecast period, driven by lower labour costs, raw material availability, and favourable regulatory policies in China and India. Latin America continues to offer significant opportunities for API manufacturers, supported by rising generic drug adoption, increasing healthcare expenditure, and initiatives to strengthen regional pharmaceutical manufacturing. Non-regulated markets across Africa, the Middle East and parts of Asia remain attractive growth avenues, driven by expanding healthcare access, growing drug consumption, and continued reliance on imported APIs.
Indian Active Pharmaceutical Ingredients (API) Industry
Indias Active Pharmaceutical Ingredient (API) market continued its strong upward trajectory through 2025.
The India API market is projected to grow from USD 14.77 billion in 2025 to USD 22.02 billion by 2030, at a CAGR of 8.31%, driven by the governments Production Linked Incentive scheme encouraging local manufacturing of critical APIs and Key Starting Materials, and Indias push for self-sufficiency, particularly in antibiotics and cardiovascular drug segments. Synthetic chemistry anchors 72.80% of 2025 revenue, while biotech APIs logging a 9.18% CAGR are capturing incremental value as monoclonal antibodies, recombinant hormones, and mRNA vectors advance through late-stage development.
Low- and medium-potency molecules accounted for 85.90% of the Indian API market in 2025, while high-potency APIs are expected to expand of 8.79% every year through 2031, reflecting the rising demand from oncology and complex therapy pipelines. Indias cost-competitiveness, regulatory track record, and strategic positioning as a trusted alternative to China continue to attract global pharmaceutical companies seeking to diversify their API sourcing.
Megatrends for the API Industry (Global)
Rise of Biologics & High-Potency APIs
The rapid ascent of biologics, biosimilars, and high-potency APIs is displacing traditional small-molecule manufacturing as the primary growth frontier. Oncology, immunology, and rare disease pipelines are driving unprecedented demand for complex, precision-engineered active ingredients, with novel modalities such as antibody- drug conjugates, peptides, and oligonucleotides increasingly shaping the next generation of API development.
Supply Chain Localisation & China+1 Strategy
Geopolitical tensions and pandemic-era vulnerabilities have accelerated a fundamental restructuring of global API sourcing. Governments across India, Europe, and the United States are actively incentivising domestic production through PLI schemes, bulk drug parks, and reshoring subsidies, while global pharmaceutical companies are diversifying manufacturing footprints away from single-source dependency, creating significant opportunities for Indian and Southeast Asian API producers.
AI & Advanced Manufacturing Technologies
Artificial intelligence, continuous manufacturing, green chemistry, and process automation are collectively transforming the economics and operating models of API production. These technologies are compressing development timelines, improving yield efficiency, reducing environmental impact, and enabling more agile, cost-effective production at commercial scale, positioning early adopters to capture a meaningful competitive advantage in an increasingly innovation-driven API marketplace.
Megatrends for the API Industry (Indian)
API Self-Reliance & Import Substitution
The rapid ascent of biologics, biosimilars, and high-potency APIs is displacing traditional small-molecule manufacturing as the primary growth frontier. Oncology, immunology, and rare disease pipelines are driving unprecedented demand for complex, precision-engineered active ingredients, with novel modalities such as antibody- drug conjugates, peptides, and oligonucleotides increasingly shaping the next generation of API development.
Shift from Formulation-Led to API-Led Export Growth
Historically, Indias pharmaceutical export story was driven by finished formulations. The year 2025 witnessed a structural shift, with bulk drugs and drug intermediates accounting for 16.08% of Indias total pharmaceutical exports, growing steadily alongside formulations. Indian companies are increasingly filing Drug Master Files with the USFDA for API molecules, building direct supply relationships with global innovators and generic manufacturers, and positioning India as a primary source, rather than a secondary supplier, in regulated API markets across the US and Europe.
Schedule M GMP Upgradation & Quality Compliance Drive
The governments revised Schedule M GMP deadline for MSMEs extended to December 2025 is driving a nationwide quality compliance transformation across Indias fragmented API manufacturing base. This is accelerating consolidation among smaller players unable to meet upgraded standards, while larger manufacturers are investing in continuous manufacturing, advanced quality control systems, and digital compliance mechanisms. This quality upgrade cycle, though challenging for smaller units, is fundamentally strengthening Indias credibility as a globally trusted, regulation- compliant API supplier a critical competitive advantage as regulated market buyers tighten supplier qualification standards.
Global Contract Development and Manufacturing Organisation (CDMO) Industry
The Global Contract Development and Manufacturing Organisation (CDMO) market demonstrated strong momentum through 2025, driven by rising pharmaceutical outsourcing, increasingly complex biologics pipelines, and the growing need for specialised manufacturing capabilities. The global pharmaceutical CRO and CDMO market was valued at USD 254.65 billion in 2025 and is projected to grow from USD 277.16 billion in 2026 to USD 594.07 billion by 2035, registering a CAGR of 8.84% during the forecast period. As pharmaceutical companies continue to prioritise innovation over in-house manufacturing, CDMOs have emerged as indispensable strategic partners offering end-to- end capabilities spanning drug discovery, clinical development, and large-scale commercial production
The biologics segment remains the most dynamic growth driver within the CDMO landscape. The global biologics CDMO market was valued at USD 25.32 billion in 2025, projected to record a CAGR of 7.14% through 2031, with fill-finish and packaging services accounting for 34.96% of market share and analytical and QC services expected to expand a 12.24% a year, reflecting the growing complexity and regulatory scrutiny associated with biologic drug manufacturing. North America controlled 34.12% of the biologics CDMO market in 2025, while Asia Pacific is set to grow fastest at a CAGR of 10.48% through 2031, underpinned by cost-competitive manufacturing hubs in India and South Korea and rapidly expanding biosimilars capacity. Both pharmaceutical and biotechnology firms are large innovators and emerging biopharmas. They are increasingly leveraging CDMO partnerships to reduce capital expenditure, accelerate time-to-market, and gain manufacturing flexibility across an evolving and diversified therapy pipeline.
Growth by Region
The US pharmaceutical CDMO market was valued at USD 39.13 billion in 2025, growing to USD 41.65 billion in 2026, and is projected to reach USD 72.98 billion by 2035 at a CAGR of 6.43% driven by rising R&D outsourcing, strategic mergers and acquisitions, and increasing demand for biologics and oncology therapies. North America retained its leadership position in the global CDMO market, commanding 37.95% of global market share in 2025, anchored by high-value biologics, gene therapy manufacturing, and a robust regulatory and innovation ecosystem.
Asia Pacific recorded the highest CAGR of 7.18%, driven by cost-competitive manufacturing capacity additions in India, China, and South Korea, with the region increasingly attracting complex biologics and sterile injectable manufacturing contracts from global pharmaceutical sponsors.
The US BIOSECURE Act and broader China+1 supply chain diversification strategies are accelerating this reorientation, with India and South Korea emerging as primary beneficiaries of global CDMO capacity realignment. Meanwhile, Europe remains focused on quality compliance and strategic reshoring, with key investments from players including Lonza and Fujifilm reinforcing the regions biologics manufacturing infrastructure.
Indian Contract Development and Manufacturing Organisation (CDMO) Industry
Indias CDMO industry continued its rapid expansion through 2025, cementing its position as one of the worlds most strategically important pharmaceutical outsourcing destinations. The Indian CDMO market was valued at USD 8.52 billion in 2025 and is projected to reach USD 16.53 billion by 2034, averaging a growth rate of 7.39%, driven by increasing pharmaceutical outsourcing, cost-competitive manufacturing, and strong regulatory compliance credentials across global markets. Indias pharma exports neared USD 30 billion through 2025, with CDMOs and Global Capability Centres identified as the primary drivers of the next phase of innovation-led growth.
Contract manufacturing services dominated the Indian CDMO market with a 53.8% share in 2025, driven by established API production capabilities and rising global demand for finished dosage forms and biologics outsourcing, with oncology accounting for 33.2% of the market share. The governments PLI scheme, the newly announced Biopharma SHAKTI initiative, and the INR 1 lakh crore Research, Development and Innovation scheme approved in 2025 are collectively accelerating investments in biologics, high-potency APIs, antibody-drug conjugates, and advanced manufacturing technologies.
Megatrends for the CDMO Industry (Indian)
Biologics & Advanced Therapy Manufacturing
Indias CDMO sector is undergoing a decisive shift from small- molecule generics towards high-value biologics, biosimilars, antibody-drug conjugates, and cell and gene therapies. Companies such as Biocon Biologics,
Shilpa Medicare, and Zydus Lifesciences are rapidly expanding biomanufacturing capacity, with ADCs recording a CAGR of 25% and cell and gene therapies at 45%. This transition is positioning India as a credible end-to-end biologics partner for global pharmaceutical companies, beyond its traditional identity as a low-cost generics manufacturer.
China+1 Strategy & Geopolitical Tailwinds
The sustained implementation of the China+1 supply chain diversification strategy continues to be the single most significant structural tailwind for Indias CDMO sector in 2025. Geopolitical tensions, the BIOSECURE Act concerns in the US, and post-pandemic supply chain vulnerabilities have prompted global pharmaceutical majors to actively shift API and CDMO contracts towards India. With over 650 USFDA-approved manufacturing facilities, the highest outside the United States. India is uniquely positioned as the most credible, regulation- compliant alternative to China for long-term outsourcing agreements.
Government Policy & Innovation Infrastructure
Unprecedented policy support is transforming Indias CDMO landscape from a cost-play to an innovation-driven ecosystem.
The PLI scheme with a INR 15,000 crore outlay, the newly announced Biopharma SHAKTI initiative, the INR 1 lakh crore Research, Development and Innovation scheme, and purpose-built bulk drug parks in Gujarat, Himachal Pradesh, and Andhra Pradesh are collectively de-risking capital deployment and attracting global partnerships. Indian CDMOs are increasingly transitioning from transactional service providers to integrated co-development partners bundling discovery, clinical development, and commercial manufacturing under a single, end-to-end platform.
Hikal: Business Review of the Pharmaceutical Division
The Pharmaceutical division showed a strong operational recovery across 2025-26, successfully transitioning from early-year demand slumps to robust, technology-driven growth in the second half. For the full year, the division recorded a revenue of INR 10,210 million with an EBIT of INR 328 million, yielding an EBIT margin of 3.2%. Following a relatively soft first half, operating performance rebounded sharply in the final quarter, generating INR 2,916 million in revenue and INR 349 million in EBIT, a 12% margin for Q4.
This financial rebound was anchored by higher production throughput and strengthening demand across both generic APIs and CDMO projects. Average capacity utilisation across the main pharmaceutical manufacturing facilities in Panoli and Bangalore rose progressively, reaching 80% to 85% during the year.
To secure sustainable mid-to-long-term growth,
Hikal significantly upgraded its technological and regulatory foundation:
Key capital investments made over the prior 12 to 18 months became active. This includes an expanded R&D infrastructure and Kilo lab in Pune (enabling single-location R&D and clinical trial material supplies), a state-of-the-art High-Potency Laboratory, and a new pilot plant at the US FDA-approved Panoli site designed for complex chemistry scaling.
The company shifted focus towards higher-value, differentiated products, accelerating development targets to five-six Drug Master File (DMF) filings annually, compared to its historical pace of 2-3 filings.
The Hikal management actively broadened its international commercial presence, establishing dedicated leadership and an upcoming office in Brazil, deepening innovator relationships in Japan, and actively pursuing new business streams in South Korea. Key product launches are slated for Japan and Brazil across 2026-27 and 2027-28.
Compliance frameworks saw significant strengthening, with all Corrective and Preventive Action (CAPA) plans regarding US FDA requirements nearing full completion, positioning the business for clear upcoming regulatory engagements.
API
The API segment showed clear signs of stabilisation and steady demand recovery throughout 2025-26, driven by a return to normal ordering patterns from customers across both regulated and emerging global markets. As industry-wide destocking pressures eased, order volumes picked up, enabling higher plant utilisation rates across Hikals primary production sites.
To protect margins against raw material volatility and increase long-term competitiveness, Hikal strategically shifted its product portfolio towards specialised, high-margin therapeutic areas. The company deepened its offerings in niche, complex categories, including oncology, central nervous system (CNS), gastroenterology, and antidiabetics.
This transition into complex, high-value chemistries was directly supported by several key infrastructure assets becoming fully operational during the year:
Upgraded laboratories provided the technical bandwidth to handle complex synthetic routes and scale niche molecules.
Located at the US FDA-approved Panoli facility, this pilot plant serves as a bridge between early R&D and commercial production, accelerating the timeline for customer sampling, process optimisation, and scale-up.
Commercial launch preparations were advanced for key API molecules in high-compliance markets, with targeted launches scheduled in Japan and Brazil across 2026-27 and 2027-28.
The API business moved past its normalisation phase, laying a stronger operational foundation to support higher-margin growth in upcoming fiscal years.
CDMO
Our Pharma CDMO segment recorded a notable acceleration in customer engagement throughout 2025-26, driven by global structural tailwinds and internal capability upgrades.
As innovator pharma companies increasingly seek supply chain resilience, cost optimisation, and geographic diversification, Hikal benefited directly from the China Plus One outsourcing trend, which is driving global customers to move business to reliable Indian partners.
This favourable macro environment translated into a healthy surge in Request for Proposal (RFP) activities across different regulated markets. Importantly, several existing customer programs successfully advanced from early-stage development into commercial scale-up phases, providing Hikal with significantly enhanced revenue visibility for the medium to long term.
Key strategic developments and infrastructure milestones in the CDMO business include:
Hikal fully operationalised its state-of-the-art High- Potency Laboratory and expanded R&D center in Pune. The expanded Kilo lab enables Hikal to provide end-to-end CDMO solutions, ranging from initial R&D to the supply of clinical trial materials (CTM), all from a single, centralised location.
The addition of the new pilot plant at the US FDA- approved Panoli facility has strengthened Hikals ability to handle complex chemistries, rapid process development, and scale-up requests from global innovator clients.
The Company is actively investing in platforms for high-growth, innovation-led therapeutic segments, specifically High-Potency Active Pharmaceutical Ingredients (HPAPIs) and Antibody-Drug Conjugate (ADC) chemistries.
While HPAPI and ADC opportunities represent a 3-to-5-year scale-up trajectory, Hikal has mapped out its next major infrastructure milestone: a planned, dedicated HPAPI manufacturing facility in Pune targeted for commercial readiness over 2027-28.
Global Animal Health Industry
The global animal health market sustained strong momentum through 2025, driven by rising healthcare expenditure for both companion and production animals, increasing focus on disease prevention, parasite control, and animal productivity, and accelerating technological adoption and innovation across veterinary care. The global animal health market was valued at USD 40.1 billion in 2025 and is projected to reach USD 51.6 billion by 2034, growing at a CAGR of 2.73%. North America retained its leadership position with a dominant market share of 44.9% in 2025, underpinned by high pet ownership rates, strong regulatory frameworks, and significant R&D investment by leading pharmaceutical companies.
Pharmaceuticals dominate the product type at 57.0% in 2025, spanning parasiticides, anti-infectives, and chronic-disease therapies. Biologicals (21.6%) command premium pricing across vaccines and monoclonal antibodies in fast-growing prevention programmes. Governments implemented stricter regulations and expanded disease surveillance programs to monitor and prevent zoonotic disease transmission, while the livestock sector strengthened biosecurity protocols to prevent outbreaks and safeguard food safety standards. Advances in veterinary diagnostics are enabling early detection and rapid response to emerging zoonotic threats, while pharmaceutical companies continue to develop novel therapeutics and biologics for more effective disease management. Digital transformation spanning Al-driven diagnostics, disease monitoring platforms, and real-time data sharing continued to redefine care standards, while a collaborative One
Health approach between veterinary and human healthcare sectors advanced more integrated and effective disease management globally.
Growth by Regional Market Segment
North America retained its leadership position through 2025, holding a dominant market share of 44.9% in 2025, driven by a growing number of pet parents seeking high-quality veterinary care, heightened awareness of zoonotic diseases, and strong government programmes supporting food safety and disease control. The US continued to anchor the region, supported by robust regulatory frameworks, widespread adoption of advanced veterinary technologies, and significant investment by leading pharmaceutical companies in research and development.
Rising meat and dairy consumption across Southeast Asia and Sub-Saharan Africa is driving biosecurity upgrades, creating demand for vaccines, parasiticides, and feed additives where multinationals have limited penetration.
Latin America, West Asia and Africa are recording steady growth, supported by expanding livestock sectors, rising awareness of zoonotic diseases, and increasing government investments in veterinary care and health products. Demand for livestock products and disease control measures remains a key growth driver across both regions, with healthcare reforms and improved access to veterinary services gradually strengthening market foundations.
Indian Animal Health Industry
The Indian animal health market generated revenue of INR 92.62 billion in 2025 and is projected to reach INR 171.91 billion by 2034 at a CAGR of 7.11%, driven by a significant expansion in therapeutic treatments, evolving regulatory standards, and a rising focus on livestock productivity. The structural core of the market is heavily dominated by the veterinary pharmaceuticals segment, which accounts for approximately 42.55% of total industry revenue. The segment is further classified into parasiticide, anti-infective, anti-inflammatory, analgesic, and others. Commercial production animals represent 71% of this market, structurally anchored by Indias position as the worlds largest milk producer and third-largest egg producer.
Managing a national cattle herd exceeding 307.5 million head has created a massive, constant requirement for clinical intervention via small- molecule treatments, particularly anti-infectives and parasiticides, to safeguard yields and treat endemic bacterial and parasitic infestations.
On the product and policy front, the clinical urgency to treat food-borne conditions, mastitis, and zoonotic diseases has prioritised the deployment of potent therapeutic agents. Anti-infectives remain the largest product category within animal pharmaceuticals, serving as the front-line response to production- limiting infections in high-density dairy and poultry clusters. Concurrently, the demand for advanced, broad-spectrum parasiticides, covering both ectoparasites and endoparasites is expanding rapidly to combat climate-driven pest infestations that directly threaten bovine weight gain and milk output. This therapeutic momentum is closely aligned with the governments infrastructure initiatives, including the Pashu Aushadhi scheme, which prioritises the streamlined distribution of affordable generic medicines, essential therapeutic compounds, and anti-infectives through PM-Kisan Samriddhi Kendras to optimise livestock health at the grassroots level.
This commercial and clinical shift towards advanced veterinary pharmaceuticals is further amplified by structural changes in urban markets and the companion animal segment. Indias pet dog count is projected to reach 51.5 million by 2028, sparking a profound pet humanisation trend that is reshaping veterinary pharmacology. Companion animal owners are increasingly demanding high-end, targeted therapeutics, including specialised oral parasiticides and advanced anti-infectives equivalent to human- grade specifications. This rapidly growing private prescription market, combined with the rising clinical necessity for specialised small-molecule therapies in livestock management, continues to pivot the Indian animal health industry away from generic biologics towards high-value, innovation-driven therapeutic chemistry.
Megatrends for the Animal Health Industry (Indian)
Pet Humanisation & Companion Animal Healthcare Boom
Indias companion animal segment is undergoing a structural transformation, driven by rapid urbanisation, rising disposable incomes, and a generational shift towards pet parenting among millennials and Gen Z. Urban pet owners are increasingly treating animals as family members, driving demand for premium diagnostics, speciality nutrition, and advanced therapeutics reshaping what was traditionally a livestock-dominated market into a more diversified, value-driven ecosystem.
Government-Led Disease Control & Digital Livestock Management
India is making unprecedented investments in animal disease control and digital veterinary infrastructure, marking a decisive policy shift from reactive treatment to proactive, technology-enabled prevention. Government-backed programmes are driving large- scale vaccination campaigns, mobile veterinary unit deployment, and digitisation of animal health records enabling real-time disease tracking and strengthening Indias preparedness framework in alignment with global One Health standards.
Growing Demand for Parasiticides and Disinfectants
The adoption of parasiticides and disinfectants continues to increase as animal health management and biosecurity practices gain greater importance. These products help control external and internal parasites, support disease prevention efforts, and contribute to improved animal well-being, productivity, and overall cattle health.
Hikal: Business Review of the Animal Health Division
The Animal Health business delivered sustained momentum throughout 2025-26, driven by increasing global outsourcing activity and deepening relationships with innovator companies. Global animal health players are actively prioritising supply chain resilience, cost optimisation, and multi-sourcing strategies to reduce their dependence on single geographic locations.
This trend has positioned Hikal as a trusted, high-reliability dual-sourcing partner globally.
Key highlights and strategic achievements in the Animal Health division include:
Hikal successfully completed the product validation phase under its major multi-year global multinational contract and transitioned into full commercial production, marking a major milestone for the segment.
Commercial volumes are scaling progressively as Hikal continues to secure customer approvals and product registrations across key regulated markets, including Europe, the US, and Japan. Additional regional approvals are on the cards.
The business received a growing volume of inquiries and RFPs from both large global innovators and emerging, niche biotech companies across API and CDMO opportunities.
Strategically, Hikal is shifting away from commoditised products towards specialised, high- complexity molecules. This segment features lower competitive intensity, stronger customer retention, and higher long-term margin sustainability.
Supported by robust global demand visibility, strong quality compliance, and expanding customer programmes, the Animal Health segment is well- positioned to serve as a key long-term growth driver for the company.
Global Crop Protection Industry
According to industry estimates and company disclosures, the global crop protection chemicals market continued to demonstrate steady growth momentum in 2025-26, supported by resilient agricultural demand and supply chain normalisation. The market is expected to expand at a moderate pace over the medium term, driven by structural factors such as rising food demand and the need to improve farm productivity. North America continues to remain a dominant region, supported by advanced farming practices and high adoption of crop protection technologies. Key drivers of this growth include the increasing global population, projected to approach 9.7 billion by 2050, alongside the pressing need to enhance crop yields from constrained arable land. Challenges such as soil degradation, climate variability, and evolving pest resistance are further accelerating the demand for effective crop protection solutions.
Technological advancements, including precision agriculture, improved formulations, and integrated pest management practices, are supporting industry expansion and efficiency improvements. Increasing policy support, greater farmer awareness, and a gradual shift towards sustainable and bio-based solutions are shaping the long-term trajectory of the sector.
In the United States, strong adoption of advanced agricultural technologies, genetically modified crops, and yield optimisation practices continue to drive demand. Heightened climate variability and pest intensity have reinforced the need for reliable crop protection solutions, supported by ongoing research investments and a progressively evolving regulatory environment.
Growth by Product Type
Herbicides continue to dominate the global crop protection market in 2025-26, accounting for 41-43% of total demand. Their strong position is driven by the increasing need for effective weed management, as uncontrolled weeds can reduce crop productivity by nearly 25-30%. Expansion of cultivated land, coupled with the adoption of modern farming practices such as no-till and conservation agriculture, has further strengthened herbicide usage. In addition, the growing prevalence of herbicide-resistant weeds across key agricultural regions is reinforcing the need for advanced and combination herbicide solutions. Their broad-spectrum applicability across crops and geographies continues to make herbicides the preferred choice among farmers.
The herbicide segment is expected to average an annual growth rate of 4.5-5.5% over the medium term, supported by the growing need to enhance farm productivity, reversing weed-related yield losses. Increasing adoption of improved formulations, including selective and low-dosage variants, along with advancements in precision application technologies, is backing this demand further. Rising farmer awareness, coupled with global food security concerns, continues to act as a stimulant for this segment.
Insecticides remain critical for protecting crops from pest infestations, particularly in regions experiencing climate variability and risingpest onslaught. Fungicides play a vital role in managing fungal diseases, especially in high-humidity and intensive farming zones. Molluscicides are used to control snails and slugs in specific crop systems, while nematicides address soil-borne pests that impact root health and crop yields. Collectively, these product categories support integrated pest management practices, enabling improved crop protection, yield stability, and overall agricultural productivity.
Growth by Region
North America dominates the global crop protection chemicals market in 2025-26, accounting for 40- 42% of the pie. Growth is supported by large-scale mechanised farming, high adoption of advanced crop protection solutions, and a gradual shift towards bio-based products as regulatory scrutiny around chemical usage intensifies. The United States remains the key contributor, with steady growth driven by yield optimisation needs, climate-related pest attacks, and steady investments in agricultural innovation.
In Europe, the transition towards sustainable agriculture is accelerating, supported by policy initiatives under the EU Green Deal, which targets a significant reduction in chemical pesticide usage by 2030. This is driving increased adoption of biologicals, integrated pest management practices, and environmentally safer formulations across the region.
Asia Pacific remains the fastest-growing market for crop protection products, with a projected CAGR of 3-4%. This growth is driven by expanding agricultural activity in countries such as China and India, rising food security concerns, and continued dependence on crop protection chemicals to enhance productivity. Increasing awareness, government support, and gradual adoption of modern farming practices are further supporting regional demand.
Latin America, led by Brazil and Argentina, sees rapid adoption of precision agriculture technologies, including drones, satellite monitoring, and data-driven application methods. These advancements are helping optimise pesticide usage, improve efficiency, and reduce environmental impact while supporting higher output.
The Middle East and Africa are putting up steady growth, supported by increasing efforts to strengthen food security and agricultural resilience. Countries such as South Africa are adopting specialised crop protection solutions to address challenges of extreme weather conditions, water scarcity, and pest pressures, ensuring more stable and reliable crop production.
Megatrends for the Crop Protection Industry (Global)
Climate Change Driving Higher Pest and Disease Recurrence
Global warming, erratic rainfall, and extreme weather conditions are leading to more frequent and unpredictable pest and disease outbreaks. These changes are intensifying crop vulnerability and compelling farmers to rely more on crop protection solutions, particularly fungicides and herbicides, to safeguard yields and ensure crop quality.
Increasing Chemical Intensity with Modern Agricultural Practices
The continued expansion of intensive farming practices, including monoculture cultivation and multiple cropping cycles, is driving higher usage of crop protection chemicals per hectare. The growing challenge of resistant pests and herbicide-tolerant weeds is further accelerating demand for effective active ingredients such as glyphosate, cypermethrin, and other advanced formulations.
Shift Toward Sustainable and Bio-Based Crop Protection Solutions
The industry is witnessing a gradual but clear shift towards environmentally sustainable alternatives, including bio-pesticides and low-residue formulations. Regulatory pressures, coupled with increasing consumer awareness and ESG priorities, are encouraging manufacturers and farmers to adopt greener solutions alongside conventional chemicals.
Evolving Pricing Dynamics and Product Differentiation
The crop protection market is experiencing widening price variation across products, driven by differences in efficacy, spectrum, and regulatory compliance costs. Premium, high-efficacy molecules are gaining traction in regions facing severe pest pressures, while cost-effective, widely used chemicals continue to dominate in price-sensitive markets, ensuring broad accessibility.
Technology Integration in Crop Protection Application
Advancements in precision agriculture, including drone-based spraying, satellite monitoring, and data- driven decision-making tools, are transforming how crop protection chemicals are applied. These technologies are improving application efficiency, reducing wastage, and enabling targeted usage, thereby enhancing both economic and environmental outcomes.
Indian Crop Protection Industry
Indias crop protection chemicals market maintained demonstrate steady growth in 2025-26, supported by increasing agricultural intensity and evolving farming practices. The market is projected to record a CAGR of 4-5% over the medium term, driven by rising demand for higher crop productivity and improved farm outcomes.
As agricultural practices modernise, Indian farming is progressively adopting advanced and sustainable techniques. A significant share of cultivated land remains focused on oilseeds and commercial crops, creating strong demand for crop protection solutions. Farmers are increasingly adopting precision farming, integrated pest management (IPM), and data-driven approaches, particularly in high-value crops, to optimise yields and reduce input inefficiencies.
Key market trends include the growing adoption of precision agriculture technologies, rising demand for bio-based and environmentally sustainable products, and increased use of insecticides driven by persistent pest pressures across regions. There is also a visible shift towards targeted, technology-enabled crop protection strategies aimed at enhancing productivity and reducing input costs.
The market continues to face challenges from rising pest-related losses, driven by climate variability and changing pest patterns. Insecticides account for a significant share of overall consumption, as farmers address infestations from pests such as aphids, stem borers, and armyworms. Crop-specific challenges, including nematode infestations in staple crops like rice, continue to impact yields and contribute to economic losses across the agricultural value chain.
Despite these challenges, targeted and scientific interventions are delivering measurable results.
The adoption of crop-specific solutions, improved formulations, and region-focused application strategies are helping reduce pest incidence and improve farm productivity. Increasing farmer awareness, supported by government initiatives and industry efforts, is further enabling the adoption of effective crop protection practices across India.
Global Personal Care Industry
The global personal care products market was valued at USD 401.57 billion in 2025 with projection to scale from USD 425.50 billion in 2026 to USD 733.96 billion by 2034, at a CAGR of 7.05%. Asia Pacific dominated the personal care products market with a share of 34.52% in 2025. This growth is increasingly being shaped by the rise of conscious consumers who prioritise sustainability, ethical sourcing, and clean- label preferences. Key market drivers include rapid urbanisation, rising disposable incomes, and an increasing ageing population that is fuelling demand for anti-ageing solutions.
Strategic focus is rapidly shifting towards Green Chemistry, as approximately 68% of manufacturers transition to bio-based and sustainable ingredient solutions to align with global environmental mandates. This shift is particularly evident in the demand for multifunctional ingredients now included in 66% of new formulations, which combine cleansing, moisturising, and protective properties to reduce formulation complexity.
Technological advancements, including AI-driven skin diagnostics, biotechnological active ingredients, and personalised formulation platforms, are fundamentally supporting industry expansion and operational efficiency. Increasing regulatory focus on ingredient transparency, rising consumer grooming awareness, and a decisive shift towards sustainable and bio-based solutions are shaping the sectors long-term trajectory.
In the United States, strong adoption of premium anti-ageing therapies, wellness-oriented skincare, and advanced male grooming practices continues to drive robust demand. Heightened sensitivity to skin health and environmental stressors has reinforced the need for reliable, high-performance personal care solutions, supported by significant research investments from global innovators and a progressively evolving regulatory landscape focused on product safety and sustainability.
Growth by Product Type
Skin care products continued to dominate the global personal care market in 2025-26, accounting for 31.9%-35% of total demand. Their leading position is driven by an intensified consumer focus on anti-aging, sun protection, and dermatological wellness, particularly among Gen Z and millennial demographics. The integration of advanced bioactive ingredients, coupled with the rise of personalised skincare solutions, has further strengthened segment growth. In addition, the growing awareness of environmental stressors and skin health is reinforcing the need for high-performance and protection- oriented formulations. Their essential role in daily grooming routines across all geographies continues to make skincare the primary choice for consumers and innovators alike.
The skincare segment is expected to maintain its dominance over the medium term, supported by technological advancements in biotechnology and the ongoing shift toward clean-label products. Increasing adoption of multifunctional ingredients, which combine cleansing, moisturising, and protective properties, is further supporting demand by reducing routine complexity for the consumer. Rising hygiene awareness, coupled with a global move towards sustainable and ethically sourced ingredients, continues to act as a key growth driver for this category.
Hair care remains a critical subsegment, witnessing rapid expansion driven by demand for herbal, restorative, and anti-pollution products that target scalp health. Colour cosmetics play a vital role in self-expression, gaining significant traction through inclusive branding and diverse shade ranges that cater to global skin tones. Fragrances and oral care address essential personal grooming and hygiene needs with stable growth fuelled by innovations in long-lasting scents and sensitivity-focused treatments. Collectively, these product categories support holistic self-care practices, enabling improved individual wellbeing, aesthetic appeal, and overall market productivity.
Growth by Region
Asia Pacific continues to lead the global personal care products market in 2025-26, accounting for approximately 34.52% of the total share. Growth is supported by a large youthful population, rising disposable incomes, and the rapid westernisation of beauty standards across major economies like China and India. China remains a massive contributor, with steady growth driven by an aging population seeking anti-aging solutions, while India is projected to reach a market valuation of USD 45.53 billion by 2026, fuelled by high grooming demand among its dynamic under-35 demographic.
North America remains the second-largest market, valued at USD 120.29 billion in 2025, with an anticipated CAGR of 8.15%. The regions growth is underpinned by a sophisticated consumer base and a strong cultural emphasis on personal appearance and wellness. The United States is the primary driver, where high adoption of premium skincare and a well-developed e-commerce ecosystem accounting for over 16% of retail sales, continue to propel market expansion.
In Europe, the transition toward clean beauty and sustainable consumption is accelerating, with the market projected to reach USD 108.87 billion by 2026. Consumers in key markets such as Germany and the U.K. are increasingly gravitating toward ethically sourced, cruelty-free, and eco-friendly products. This shift is driving manufacturers to innovate in sustainable packaging and bioactive ingredients to meet stringent regulatory standards and environmental expectations.
Latin America, led by Brazil and Argentina, is witnessing steady growth as a rising middle class drives demand for premium personal care products. The region is benefiting from the growing influence of social media, which heavily shapes product choices and accelerates the adoption of new beauty trends.
The Middle East and Africa region is experiencing expanding growth, supported by rising economic power and increased spending on quality personal care goods. Countries such as the UAE are emerging as key markets, where the rise of digital platforms and influencer recommendations is transforming traditional purchasing behaviours and driving sales through online channels.
Megatrends for the Personal Care Industry (Global)
Shift Towards Sustainable and
Bio-Based Clean Beauty
The industry is undergoing a significant transformation driven b conscious consumers prioritising sustainability and ethical sourcing. Regulatory pressures and rising awareness of the potential adverse effects of synthetic chemicals, such as irritants and allergens are encouraging a decisive shift towards organic, natural, and cruelty-free alternatives.
Technological Integration and AI-Driven Personalisation
Advancements such as AI-based skin diagnostics, bio-printed skin models for testing, and customisable beauty platforms are fundamentally transforming R&D and consumer engagement. These technologies allow for more effective delivery of active ingredients and tailored consumer experiences.
Digital Transformation and the Rise of E-Commerce
The emergence of sophisticated online retailing channels and influencer marketing is accelerating market reach and accessibility. E-commerce now represents approximately 30% of total industry revenue, allowing brands to connect directly with tech-savvy consumers through 24/7 order placement and tailored digital experiences.
Indian Personal Care Industry
Indias personal care sector has entered a high- growth phase, characterised by a transition towards specialised hygiene, grooming, and advanced skin and hair health. The market is projected to reach a valuation of USD 45.53 billion by 2026, fundamentally underpinned by a robust personal care ingredients segment valued at USD 700.4 million in 2025 and expected to grow to USD 1,128.7 million by 2035.
This expansion is primarily fuelled by the countrys unique demographic profile, where approximately 65% of the population is under the age of 35, creating a dynamic and youthful consumer base with an increasing inclination toward premium and natural formulations. Rapid urbanisation and supportive government incentives have further accelerated manufacturing expansion, positioning India as a primary driver of the Asia Pacific regions status as the fastest-growing global market.
The industry is also undergoing a significant digital transformation, with e-commerce and digital platforms driving a 25% year-over-year increase in regional sales. Modern consumption patterns are increasingly defined by a 14% rise in demand for herbal and organic skincare as consumers move away from synthetic chemicals in favour of safer, natural alternatives. Simultaneously, evolving social norms have catalysed a boom in the male grooming segment, which is the fastest-growing frontier with an estimated CAGR of 8.5%. These trends, supported by innovative retail digitisation tools like the Shikhar app, are broadening the market reach and ensuring that Indian consumers remain at the forefront of global personal care innovation.
Elevating Capabilities
Hikal Limited continues to strengthen its commercial and technical capabilities to address evolving customer requirements and ensure seamless scalability from laboratory to pilot and commercial production. As a technology-driven partner across pharmaceuticals and crop protection, Hikal consistently invests 4-5% of its annual revenues in Research & Technology (R&T), with a strong focus on developing safe, efficient, and environmentally sustainable processes.
During the year, the company further leveraged its Reaction Calorimeter facility at the R&T Centre, equipped with advanced systems such as Mettler Toledo RC1mx, to enhance safe scale-up capabilities. This infrastructure enables precise evaluation of thermal profiles, including parameters such as MTSR, heat of reaction, and accumulation. The in-house capability has contributed to reduced development timelines, lower external dependency, and improved early-stage risk assessment in process development.
In addition, Hikal has continued to upgrade its laboratory infrastructure and invest in advanced analytical technologies to support complex chemistry requirements, reinforcing its long-term commitment to innovation, quality, and customer-centric development.
Process Improvement
The R&T function remains focused on continuous process optimisation, including reduction of cycle times and improved solvent efficiency. Increased emphasis is placed on solvent recovery and recycling, aiming to minimise waste generation and reduce environmental impact while improving overall process economics.
Filings
The R&T team has maintained strong momentum in regulatory filings, including submissions and updates to US Drug Master Files (DMFs) and Certificates of Suitability (CEPs) aligned with European regulatory standards. Ongoing amendments and compliance enhancements reflect the companys focus on maintaining global regulatory readiness and supporting customer requirements across regulated markets.
Advancing Innovation in Animal Health APIs
Hikal made steady progress in expanding its Animal Health API portfolio. Multiple APIs developed by the R&T team have been successfully validated at the dedicated Animal Health manufacturing facility at Panoli, with additional validations underway. The company has also progressed on intellectual property creation, including patent filings related to novel process innovations, alongside contributions to scientific publications.
Further, development of novel chemical entities (NCEs) in the Animal Health segment is advancing, with one molecule in advanced process development stages and another progressing through early-stage development and customer engagement. These initiatives reflect Hikals strategic focus on building a differentiated and innovation-led pipeline for long-term growth.
Embedding Green Chemistry in Animal Health API Development
Hikal embeds Green Chemistry principles across its Animal Health API development programmes, strengthening its commitment to sustainable and responsible manufacturing. During 2025-26, multiple APIs were progressed from development to validation, with plant-scale execution carried out at its dedicated Animal Health manufacturing facilities, including Panoli. These developments reflect a continued focus on reducing environmental impact through optimised reaction pathways, lower solvent consumption, and improved process efficiency.
In addition to ongoing API programmes, the company has further strengthened its sustainability- led approach by integrating process intensification techniques, solvent recovery systems, and waste minimisation practices at scale. Continued progress in validation of new APIs, along with advancement of novel chemical entities (NCEs), highlights Hikals ability to combine innovation with environmental stewardship. The successful scale-up and validation of multiple molecules underscore its technical capabilities and reinforce its position as a reliable partner delivering high-quality, eco-efficient solutions for global Animal Health customers.
CDMO
Hikal Limited continued to strengthen its CDMO operations during 2025-26, with the successful execution of multiple complex batches in specialised reactor systems, including cryogenic conditions for customer projects involving highly reactive chemistries. The team demonstrated strong capabilities in safely handling sensitive and hazardous reagents, reinforcing its expertise in complex process execution. The CDMO business also witnessed continued traction through repeat orders for advanced chemistry projects, including Click Chemistry, with preparations underway for scaling up to larger commercial batches at Unit 2.
Innovation, Safety and Sustainability in Process Development
Scaling Click Chemistry with Safety
The company further advanced its capabilities in Click Chemistry, successfully scaling processes for commercial applications while maintaining stringent safety standards. This achievement underscores Hikals leadership in adopting advanced chemistries in India, supported by robust safety protocols and engineering controls.
Process Development for a Flavouring Agent
The R&T team developed efficient and scalable synthesis routes for specialty and performance molecules, including flavouring and fine chemical intermediates. These developments are aligned with customer requirements and lay a strong foundation for future commercialisation and scale-up.
Greener Processes for Advanced Intermediates
Hikal continued to focus on sustainable process development by designing greener routes for advanced intermediates. Key improvements include the elimination of hazardous reagents, optimisation of Process Mass Intensity (PMI), and enhanced throughput, reflecting the Companys commitment to environmentally responsible manufacturing.
Strengthening Process Safety Infrastructure
The company further enhanced its process safety capabilities through the operationalisation and utilisation of its dedicated Process Safety Lab at the R&T centre. Equipped with advanced tools such as Reaction Calorimetry, DSC, and gas analysis systems, the facility supports early hazard identification, safe scale-up, and improved process reliability, managed by a specialised team of scientists.
Advancing Environmental Compliance - Zero Liquid Discharge (ZLD)
In line with regulatory requirements and sustainability goals, Hikal continues to maintain and strengthen its Zero Liquid Discharge (ZLD) systems across manufacturing facilities. Advanced effluent treatment infrastructure, including Ultrafiltration (UF), Reverse Osmosis (RO), Mechanical Vapor Recompression (MVR), and drying systems, ensures effective water recovery, minimal discharge, and full compliance with environmental norms.
Outlook
We will continue to align its R&T strategy towards a balanced mix of customer-led and in-house product development initiatives, with a strong emphasis on timely commercialisation. The focus remains on converting contract development engagements into long-term manufacturing partnerships across both the pharmaceuticals and crop protection segments, thereby strengthening revenue visibility and customer stickiness.
To enhance product competitiveness, the Company is intensifying its research and technology efforts towards improving yield per batch, reducing cost per batch and increasing the recovery and reuse of solvents and other supporting materials. These initiatives are supported by process optimisation, productivity enhancement and investments in advanced technologies and digitalisation. Strategic collaborations further strengthen development capabilities and operational performance, enabling the Company to deliver high-quality, cost-effective solutions while maintaining healthy margins in a dynamic market environment.
Hikal remains committed to advancing sustainable manufacturing practices through the adoption of greener technologies and environmentally responsible processes. Ongoing efforts to reduce carbon footprint, improve resource efficiency, and optimise energy and solvent usage will play a key role in enhancing overall process efficiency while aligning with global ESG expectations and customer sustainability goals.
Financial Review
Abridged Consolidated Statement of Profit and Loss
(INR in Million)
Particulars |
2025-26 | 2024-25 |
| Total Revenue | 17,126 | 18,598 |
| EBITDA | 2,328* | 3,335 |
| PBT | (782) | 1,239 |
| PAT | (487) | 909 |
Revenue from Operations
Our total revenue registered a decrease of 7.91% YoY, reaching INR 17,126 million compared to the previous years figure of INR 18,598 million.
EBITDA
Our EBITDA for fiscal 2025-26 stood at INR 2,328 million, marking a degrowth of 30.2% YoY, compared to the previous years figure of INR 3,335 million, with margins at 13.6%
PAT
In 2025-26, our PAT decreased by INR 1,396 million, from INR 909 million to a loss of INR 487 million.
Commentary
Revenue declined primarily due to subdued Pharmaceuticals performance in the first half, impacted by slower production and shipments following the US FDA-related compliance measures, alongside continued pricing pressure in Crop Protection amid the prolonged industry downcycle.
EBITDA declined in line with the weaker revenue performance, reflecting lower operating leverage, compliance-related production constraints in Pharmaceuticals, and continued pricing pressure in Crop Protection. Margin performance improved towards the end of the year, supported by better product mix, utilisation and operational efficiencies.
The decline in PAT was primarily attributable to exceptional charges during the year, including impairment of a multipurpose manufacturing facility at Panoli and provisions related to the new labour code. Excluding these exceptional items, PBT from operations remained positive at approximately INR 70 million.
Cash Flow Position
As of 31 March 2026, the cash flow position remained strained. The Company generated INR 3,021 million from operating activities, an increase of INR 217 million from the previous years figure of INR 2,804 million. The Companys investing activities resulted in a cash outflow of INR 1,453 million, primarily towards capacity expansion as part of Hikals capex programme aimed at realising future business opportunities. Meanwhile, financing activities resulted in a cash outflow of INR 1,601 million, compared with INR 1,436 million in the previous year, reflecting higher financing-related outflows. As of 31 March 2026, the Companys closing balance of cash and cash equivalents stood at INR 96 million.
Commentary
While operating cash generation improved during the year, cash flows remained constrained by continued investments in debottlenecking, regulatory upgrades and capacity expansion, alongside financing outflows. The Company continued to fund its targeted growth initiatives through a mix of internal accruals and debt.
Debt Position
In 2025-26, the net-debt equity ratio has decreased to 0.56 compared to 0.59 in the previous year. The interest cost incurred during the current fiscal year was INR 621 million, indicating a decrease from the previous years interest cost of INR 752 million.
Return on Equity (RoE) and Return on Capital Employed (RoCE)
The year 2025-26 saw a decrease in the Return on Equity (RoE) to (3.96%), compared to the previous years figure of 7.41%. The Return on Capital Employed (RoCE) has also decreased from 9.73% in 2024-25 to 7.82% in 2025-26.
Capex
For 2025-26, we have allocated a total of INR 1,481 million towards a capex programme aimed at increasing capitalisation. The funds will be used to create multi- product plants that will benefit both the Pharmaceutical and Crop Protection divisions, as well as upgrade the infrastructure of existing production facilities.
Commentary
The improvement in the net debt-to-equity ratio reflects the Companys continued focus on disciplined capital allocation and balanced funding of growth initiatives through internal accruals and debt. The lower interest cost further supported the reduction in financing burden.
The RoE declined due to the loss recorded during the year, while the RoCE was impacted by subdued profitability against the capital deployed for capacity expansion, regulatory upgrades and new growth platforms. The management expects these investments to support improved returns as the new capacities scale up.
The capex programme focused on debottlenecking, regulatory upgrades and expanding CDMO capabilities, with investments directed towards high-ROI opportunities. The programme also includes retooling existing assets to support Pharmaceuticals and Animal Health, strengthening capacity for future growth.
Consolidated Cash Flow Statement
(INR in million)
Particulars |
As on 31 March 2026 | As on 31 March 2025 |
| Opening Cash and Cash Equivalents | 129 | 126 |
| Cash flows from: | ||
| (a) Operating Activities | 3,021 | 2,804 |
| (b) Investing Activities | (1,453) | (1,365) |
| (c) Financing Activities | (1,601) | (1,436) |
| Closing Cash and Cash Equivalents | 96 | 129 |
Key Financial Ratios
Particulars |
As on 31 March 2026 | As on 31 March 2025 | Variance (%/bps) |
| Debtor Turnover | 3.54 | 3.46 | 2 |
| Inventory Turnover | 2.20 | 2.62 | 16 |
| Interest Coverage Ratio | 2.86 | 4.00 | (29) |
| Current Ratio | 1.30 | 1.26 | 3 |
| Net Debt Equity Ratio | 0.56 | 0.59 | 5 |
| Net Profit Margin (%) | (2.85) | 4.90 | (158) |
| Net Worth | 11,990 | 12,622 | (5) |
Strategic Review Project Pinnacle
Hikal Limited continues to drive its business transformation journey through Project Pinnacle, aimed at strengthening long-term growth visibility and operational resilience. Progressing through its advanced phase, the initiative is delivering sustained outcomes by enhancing supply chain agility, accelerating de-risking strategies, building differentiated capabilities, expanding global customer engagements, and strengthening the technology platform. The programme remains a key enabler in improving execution efficiency, supporting scalable growth, and aligning operations with evolving global market dynamics.
Leadership in ESG
Hikal Limited remains committed to embedding sustainability across all aspects of its operations, in line with its purpose of improving lives and serving the community. As part of its ESG framework, the Company continues to identify improvement areas, strengthen governance practices, and actively engage with global rating agencies to benchmark and enhance performance.
Its sustainability efforts continue to be recognised through reputed global platforms, including EcoVadis and CDP, reflecting strong progress in environmental and social performance. ESG remains a core strategic priority, supported by a structured roadmap focused on reducing environmental impact, improving resource efficiency, and driving long-term value creation for stakeholders.
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