Pharma stock watch: Are Indian midcaps like Glenmark better positioned than the giants?

India’s pharmaceutical sector is entering a new inflection point in 2025, shaped by a transition from high-volume generics to innovation-led, value-driven growth. While large-cap players like Sun Pharmaceutical Industries, Cipla, and Dr. Reddy’s Laboratories continue to dominate by scale and global footprint, the spotlight is quietly shifting to midcap pharma stocks—particularly Glenmark Pharmaceuticals Limited. With a differentiated innovation pipeline, robust branded portfolio performance, and emerging biotech credentials, Glenmark is redefining what a mid-sized Indian pharma company can achieve on the global stage.

The structural divergence between innovation-forward midcaps and compliance-constrained large caps is becoming clearer this year, as investor sentiment and institutional flows begin reflecting a preference for focused, R&D-leveraged business models. Amid rising pricing pressures in the U.S. generics market and increasing regulatory risk in mature markets, Glenmark’s FY25 earnings report and FDA Fast Track milestone for its oncology drug ISB 2001 offer a credible case for midcap resilience.

Why Is Glenmark Attracting More Investor Attention in 2025?

Glenmark Pharmaceuticals delivered consolidated revenue of ₹1,33,217 crore in FY25, marking a year-on-year growth of 12.8%. The company’s EBITDA rose sharply to ₹23,510 crore, nearly doubling from ₹11,953 crore in FY24, resulting in a robust EBITDA margin of 17.6%. This growth, despite persistent U.S. headwinds, reflects a well-diversified portfolio across India, Europe, and emerging markets. Glenmark’s adjusted Profit After Tax (PAT) for FY25 stood at ₹13,894 crore with a 10.4% margin—underscoring solid operational performance.

Institutional sentiment appears to be realigning with this momentum. On May 24, 2025, Glenmark stock closed at ₹1,420.20, down 0.66%, but still outperforming the broader Nifty Pharma index, which saw pressure amid weak U.S. sales updates from peers. Glenmark’s performance has been underpinned by a 31.9% YoY growth in its India business, a 17.6% uptick in Europe, and margin-focused reforms, such as discontinuation of low-yield brands in the hospital generics segment. These developments come at a time when large-caps like Cipla and Dr. Reddy’s reported either flat or modest single-digit growth in key geographies.

How Do Midcap Pharma Players Like Glenmark Compare to Large-Caps?

The Indian pharma industry has traditionally leaned on large-caps for predictability, especially due to their presence in high-volume U.S. markets. However, FY25 has revealed significant margin compression among these giants due to ongoing price erosion and patent cliffs. Sun Pharmaceutical Industries Ltd., despite its leading position, posted sub-10% topline growth in FY25 and is grappling with integration costs in its specialty business.

In contrast, Glenmark has managed to improve both topline and bottom-line performance even without a breakthrough U.S. launch. Its growth has come from differentiated branded plays in Europe and sustained expansion in India, where it now ranks second in dermatology and cardiac, and third in respiratory care per IQVIA MAT March 2025 data.

Glenmark’s diversified exposure—across 80+ countries—cushions it from regulatory volatility in any one geography. In comparison, Dr. Reddy’s Laboratories continues to face litigation-linked liabilities and pricing constraints in its key U.S. portfolio. Cipla’s U.S. gains have slowed as it exits mature molecules and enters a phase of respiratory portfolio realignment.

What Is Driving Glenmark’s Innovation Momentum?

A central differentiator for Glenmark is the accelerated progress made by its biotech arm, Ichnos Glenmark Innovation (IGI). In April 2025, the U.S. FDA granted Fast Track designation to ISB 2001, a trispecific T-cell engager targeting relapsed/refractory multiple myeloma. ISB 2001 has already shown an overall response rate of 75% in early Phase 1 trials, with low adverse event incidence. The candidate will be presented at ASCO 2025 in the Rapid Oral Abstract session—a prestigious forum reserved for breakthroughs expected to shape clinical standards.

ISB 2001 is unique among Indian-origin assets. It does not compete in biosimilars or me-too complex generics but aims to disrupt the oncology market with a first-in-class immunotherapy developed on IGI’s proprietary BEAT® platform. If ISB 2001 enters late-stage trials with successful readouts in FY26, Glenmark could enter licensing partnerships or pursue monetization of the asset in North America or Europe.

In contrast, innovation efforts by large-caps are either commercial (Sun Pharma’s dermatology/ophthalmology pipeline) or defensive (Dr. Reddy’s complex generics and digital health). Glenmark’s ambition—especially if supported by strategic funding or a spinoff of IGI—could mark the arrival of India’s first truly global biotech player among listed pharma firms.

What Are FIIs and Domestic Funds Doing Post-FY25 Earnings?

Foreign institutional investors have shown signs of renewed interest in Glenmark following the Q4FY25 results and Fast Track announcement. While large-caps continue to enjoy strong mutual fund holding, their room for rerating is limited unless they post breakout quarters or M&A wins. Glenmark’s midcap valuation, on the other hand, presents optionality: at lower P/E and EV/EBITDA multiples than peers, the stock offers more leverage to positive clinical or regulatory developments.

As of late May 2025, Glenmark continues to trade 22% below its 52-week high of ₹1,830.95 despite strong financial delivery. Should Phase 2 for ISB 2001 commence in FY26 as expected, or if Glenmark secures ex-U.S. commercialization rights through global partnerships, analysts believe a sharp rerating is likely.

Why Are Midcap Pharma Stocks Gaining Ground?

Broader economic and regulatory trends are tilting the risk-reward balance toward midcaps. With the U.S. Inflation Reduction Act and increased scrutiny on price parity, large-cap Indian exporters are seeing gross margin compression. Midcaps with branded exposure, flexible go-to-market models, and focused portfolios are better suited to adapt. Moreover, midcaps are less burdened by legacy compliance issues or stretched integration timelines.

Glenmark, with its consumer care business, branded formulations, and expanding specialty pipeline, embodies this strategic realignment. Its non-prescription division posted 23.5% growth in Q4FY25, with brands like Candid™ and Scalpe™ leading the charge. As more institutional investors diversify away from over-owned large-caps, companies like Glenmark and Zydus Lifesciences are gaining traction.

What’s Next for Glenmark and Midcap Pharma in FY26?

Analysts expect Glenmark to initiate global Phase 2 trials for ISB 2001 in H2 FY26, with updates at ASCO and EHA 2025 forming the clinical validation base. The company is also preparing for the UK launch of WINLEVI and broader rollout of RYALTRIS in 10–12 additional markets. On the financial side, improved operating leverage and a steady flow of high-margin products in India and Europe should continue supporting margin expansion.

For the broader midcap pharma segment, the outlook remains favorable. Companies that successfully combine branded products, innovation pipelines, and regional diversification are expected to deliver better risk-adjusted returns than legacy giants facing regulatory overhang and capital-intensive transformation cycles.