Artificial intelligence could add as many as four percentage points to the profit margins of Indian pharmaceutical companies, according to a new analysis by brokerage Bernstein.
The projection reflects growing optimism that AI-powered tools — used across drug manufacturing, supply chains, and clinical operations — can meaningfully cut costs and improve efficiency for an industry already known for lean operations.
Bernstein also offered a pointed strategic recommendation: India's pharma sector should resist the urge to chase Big Pharma's expensive model of discovering entirely new drugs from scratch. Instead, according to Bernstein, Indian companies are better positioned to focus on specialty medicines and incremental innovation — improving existing drugs, expanding into complex generics, and targeting niche therapeutic areas where deep manufacturing expertise matters more than billion-dollar R&D budgets.
This advice reflects a long-running debate in Indian pharma. Giants like Sun Pharma, Dr. Reddy's, and Cipla built their global presence on affordable generics, but face pressure to move up the value chain as generic pricing erodes. Jumping straight to novel drug discovery, however, carries enormous risk and cost that has humbled even well-funded Western players.
AI, in this framing, is not a shortcut to becoming the next Pfizer — it is a margin engine that makes India's existing strengths more profitable. By automating processes, accelerating formulation development, and optimizing manufacturing, companies could capture efficiency gains without rewriting their entire business model.
For investors and policymakers watching the sector, the message is clear: AI's near-term value in Indian pharma lies in sharpening a competitive edge that already exists, not in betting on a fundamentally different strategy.