India’s Specialty Chemicals Rebound, Pharma Exports Surge

India’s specialty chemicals industry and pharmaceutical exports continue to showcase resilience amid global uncertainties. As per the latest PhillipCapital’s Pharma and Chemicals EXIM Monthly Update – March 2025, Q4 FY25 reflects early signs of recovery in the specialty chemicals sector, while pharmaceutical exports maintain an 8-9% annual growth rate. This upward trend is fueled by the robust demand for high-value drugs such as gRevlimid (for blood cancer treatment) and Mirabegron (for overactive bladder treatment). Several leading Indian firms, including Zydus Life, Sun Pharma, and Lupin, have capitalized on increasing exports to the U.S. Despite challenges in global markets, India’s specialty chemical firms exhibit mixed performance, with some benefiting from stabilizing raw material costs and easing crude prices.

Pharmaceutical Exports: Consistent Growth Amid Global Demand

Strong Performance Driven by Generic Drug Exports

India’s pharmaceutical sector has demonstrated stable growth, particularly in the generic drug segment. Demand for gRevlimid, a generic version of Celgene’s Revlimid, continues to be a significant growth driver. While exports of this drug remain sporadic, key industry players have registered record-breaking revenues:

• Zydus Life achieved its highest-ever monthly export of ₹12,416 crore in February 2025.
• Sun Pharma reported exports worth ₹19,409 crore in January 2025.

With gRevlimid’s patent set to expire in Q4 FY26, Indian pharmaceutical companies are expected to accelerate exports to maximize sales before increased competition erodes pricing power.

Expansion of Mirabegron Market Share

Another key contributor to pharmaceutical export growth is Mirabegron, a drug used to treat overactive bladder. Zydus Life and Lupin launched this medication in the U.S. under exclusivity in April 2024, resulting in substantial export increases:

• Zydus Life has exported $326 million worth of Mirabegron since its approval.
• Lupin has exported $101 million within the same period.

The exclusivity period has provided a competitive edge, allowing these firms to capture a significant market share before additional players enter the segment.

CDMO Segment Boosts Pharmaceutical Sector Growth

Contract development and manufacturing organization (CDMO) services have played an instrumental role in India’s pharmaceutical growth. Companies are increasingly securing lucrative contracts with global pharmaceutical giants. Laurus Labs, for example, recorded a 63% QoQ growth in exports due to its supply of a new CDMO compound to Pfizer, worth $17 million. The growing emphasis on CDMO partnerships suggests a long-term expansion strategy for Indian pharma firms in global markets.

Specialty Chemicals: Early Signs of Price Recovery

The specialty chemicals sector has faced multiple challenges in the past year, including geopolitical tensions, supply chain disruptions, and volatile raw material costs. However, Q4 FY25 has shown early signs of price stabilization and recovery, suggesting a possible turnaround for the industry.

Notable Performances in Specialty Chemical Exports

While specialty chemical exports posted muted single-digit growth, individual companies recorded significant progress:

• Vinati Organics reported a 25% YoY and 46% QoQ growth in exports in February 2025, driven by the rising demand for ATBS (Acrylamido Tertiary-Butyl Sulfonic Acid). With its 50% capacity expansion, the company is poised for further growth.
• SRF Ltd. posted a 45% QoQ and 9% YoY increase in exports, propelled by seasonal demand for specialty chemicals and refrigerant gases.

Despite these gains, the overall export run rate for specialty chemicals remains in line with previous Q4 estimates, indicating that a sustained recovery is still in progress.

Factors Influencing Recovery and Growth

Stabilizing Raw Material Costs and Softening Crude Prices

One of the primary factors aiding the recovery of the specialty chemicals sector is stable input costs. Softening crude oil prices have reduced cost pressures, allowing manufacturers to maintain margins despite fluctuations in demand.

Global Demand Trends: Key Watchpoint

While local price recovery is evident, global demand trends remain a crucial factor for sustained growth. The uncertain geopolitical and macroeconomic landscape continues to impact trade flows, making it essential for Indian firms to diversify export markets and explore strategic partnerships.

Innovation and Capacity Expansion

Several Indian chemical companies are investing in R&D and capacity expansion to strengthen their global footprint. With a focus on high-margin specialty chemicals, firms like Vinati Organics and SRF Ltd. are leveraging their technological expertise to enhance their competitiveness in international markets.

Challenges and Risks

Despite positive indicators, certain challenges persist for both the pharmaceutical and specialty chemical sectors:

1. Geopolitical Uncertainties: Trade restrictions, geopolitical conflicts, and sanctions could disrupt export momentum.
2. Macroeconomic Fluctuations: Rising inflation and currency fluctuations may impact profitability.
3. Patent Expirations in Pharmaceuticals: As exclusivity periods end, increased competition may erode pricing power for Indian drug manufacturers.
4. Environmental Regulations: Stricter compliance norms in international markets may require additional investments in sustainable manufacturing practices.

Future Outlook

The long-term prospects for both the pharmaceutical and specialty chemicals sectors remain positive. The pharmaceutical industry is expected to continue its upward trajectory, driven by:

• Growing global demand for generics.
• Expanding CDMO opportunities.
• Strategic investments in high-value drugs.

Meanwhile, the specialty chemicals industry, despite short-term volatility, has the potential for a strong rebound, supported by:

• Price recovery in key segments.
• Capacity expansion initiatives.
• Stable input costs and technological advancements.

India’s specialty chemicals sector is showing early signs of stabilization, while pharmaceutical exports maintain strong momentum despite global challenges. Strategic investments, capacity expansion, and favorable raw material trends are paving the way for recovery and growth in both industries. However, geopolitical and economic uncertainties remain key risk factors. As Indian companies navigate these challenges, their ability to adapt and innovate will be crucial in sustaining long-term success in global markets.