Brokerage Report: CLSA expects India pharma market to grow at 8-9% in 2025, Dr. Reddy’s downgraded to ‘Underperform’, Aurobindo Pharma upgraded to ‘Outperform’

CLSA has provided an optimistic outlook on the Indian pharmaceutical market, forecasting an 8-9% growth in 2025, which is slightly better than the US market. The brokerage emphasized that Indian export-oriented companies will continue to depend on large on-off drugs for revenue growth. However, it expects generic price erosion to persist in the mid-single-digit range.

Key highlights:

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  • Competition for key drugs is expected to impact Dr. Reddy’s Laboratories, Zydus, and Cipla.
  • CLSA prefers companies with higher domestic market exposure and hospital-linked services over pure drug makers.
  • Diagnostics companies are favored, with Apollo Hospitals, Max Healthcare, and Dr. Lal Pathlabs among its top picks.

Stock-specific actions:

  1. Dr. Reddy’s Laboratories: Downgraded to ‘Underperform’ with a revised target price of ₹1,090 (from ₹1,140).
  2. Aurobindo Pharma: Upgraded to ‘Outperform’ with a target price of ₹1,400 (from ₹1,540).
  3. Dr. Lal Pathlabs: Upgraded to ‘Outperform’ with a target price of ₹3,240 (from ₹3,110).

CLSA’s focus remains on companies with strong domestic demand drivers and healthcare services that are less exposed to competitive pressures in the global generics market.

Disclaimer: This article is for informational purposes only and does not constitute financial advice.