The current geopolitical disruptions have pharma finance heads and founders advocating fiscal discipline but almost paradoxically, aggressively pursuing opportunities coming out of the same crisis. Boardroom strategies are choosing to keep their gaze on long term gains, while dealing with the short term pain.
As Ashok Nair, MD, RPG Life Sciences puts it, “Our capital allocation philosophy remains being prudent, balanced and long-term oriented. In periods of uncertainty, our focus is on sharper prioritisation of investments rather than short-term reactions.
We continue to invest in core growth areas including manufacturing modernisation, R&D, digital capabilities and supply chain resilience, while focusing on margin protection and improvement. Maintaining a strong balance sheet, diversified business model and execution agility remains critical for us as we navigate evolving geopolitical conditions and prepare for long-term growth.”
Casting a CFO lens, Ramesh Swaminathan, Executive Director, Global CFO, Head of IT and API Plus SBU, Lupin is unequivocal, when he says, “In a volatile environment, the strength of the balance sheet becomes a key enabler. We will continue to focus on cost optimisation, improving operational efficiencies, and ensuring disciplined capital allocation. At the same time, we are committed to investing in areas with strong long-term potential, so it’s about striking the right balance between prudence and growth.”
Spelling out the strategy when it comes to allocating investments for such times and preparing for what comes next, Swaminathan says, “In such an environment, we maintain a prudent financial approach and make measured choices — balancing growth investments with flexibility to adapt as conditions evolve.”
Lupin’s approach is to stay focused on long-term value creation, continuing to invest in areas where they have a clear strategic advantage, while being mindful not to overextend the balance sheet. At the same time, the company will ensure they have enough financial flexibility to navigate volatility—whether it’s cost pressures or emerging opportunities.
In addition, Swaminathan says, “We also prioritise investments that strengthen the fundamentals—like quality, supply chain resilience, and operational efficiency—because these are critical to staying competitive in the long run. Our R&D investments remain focused on differentiated, high barrier opportunities where we see durable global demand and greater value-creation potential. This ensures our future pipeline remains highly insulated from standard market volatility.”
Not just surviving but thriving beyond disruptions
For Lupin it sounds like business as usual. Larger pharma companies have the wherewithal to withstand headwinds but would such disruptions see smaller promoter driven companies fold up and pull out of the sector?
Manish Jain, Director, Naprod Life Sciences, which specialises in oncology and anesthesia, spells out that the most immediate threat in the current environment is raw material supply instability, driven by geopolitical conflicts and concentrated sourcing. He points out that India still imports a majority of its API and KSM needs, and disruptions in petrochemical feedstocks or transport routes have rapidly caused price increases of key inputs like paracetamol and solvents by up to 30–40 per cent or more.
Reflecting the realities for India’s large pharma MSME base, he points out that smaller firms without buffer capacity are especially exposed, and such pressures can quickly compress margins and disrupt production schedules if not proactively managed.
Inspite of current disruptions, smaller pharma companies seem more prepared this time. In fact, like their larger peers, they are also planning for the long term. Perhaps the bounce back after a global pandemic like COVID has honed survival instincts and pharma companies across the spectrum are now more confident of not just surviving but thriving beyond such disruptions.
Balancing operational stability with capability creation
Representing the Federation of Pharma Entrepreneurs (FOPE), National President, Harish K Jain avers that in periods of uncertainty, capital allocation becomes less about maximising short-term returns and more about building strategic resilience without losing growth momentum. According to him, “The capital allocation should be a careful balance of operational stability of today and capability creation for the long term, say 10 years. The mistakes many firms make during uncertainty is either becoming excessively defensive or overextending aggressively. The right approach is disciplined selective aggression.”
He recalls McKinsey’s Three Horizon Framework, which was designed to help companies of all sizes balance their focus between short term and long term goals, by segregating the horizon into three timeframes:
- Now: Defending and extending your existing moneymaking operations. Invest in quality systems, regulatory compliances, optimise processes, maximise profits, and increase efficiency to fuel future investments. In uncertain times, continuity itself becomes a strategic asset.
- Near future: Nurturing rising, entrepreneurial ventures and scaling new business models. Allocate resources to digital transformation, new markets, and rapidly scaling pilot programs.
- Distant future: Creating viable, disruptive options for long-term growth. Invest in exploratory research, speculative technology, and pilot programs that may take years to mature.
Summing up, he advocates that in uncertain times companies need to preserve strategic liquidity, staying financially disciplined, but technologically ambitious.
For example, as Director, Embiotic Laboratories Harish Jain’s priorities for FY2026-27 will be firstly, to move from cheap manufacturing to differentiated science and execution with special emphasis on specialty formulations, complex generics and CDMO partnerships. His second priority will be to build quality reputation and thirdly to create a talent pool.
Global instability as the new normal?
Saurabh Agarwal, Director, HAB Pharma emphasises that the one thing the industry has clearly learnt (thanks to the geopolitical disruptions) is that “inventory is cheaper than shutdown.”
As Agarwal spells out, “In the current environment, investments are being prioritised towards resilience rather than only expansion.
Compliance investments remain non-negotiable, especially with increasing global scrutiny and revised Schedule M expectations. Alongside this, capital allocation is focused on five aspects: supply chain stability, automation and data integrity, energy optimisation, vendor diversification and critical inventory management.”Reflecting the export-oriented nature of pharma operations, Agarwal mentions that HAB Pharma is “also balancing forex exposure carefully. While USDINR volatility increases input costs, export receivables in US dollars provide a partial natural hedge for Indian exporters.”Zooming out to the big picture, Agarwal says that the broader strategy is to build an organisation that can continue operating efficiently even during periods of global instability, rather than depending on ideal market conditions.
For the current financial year, Manish Jain reveals that Naprod Life Sciences’ strategic priorities focus on supply chain resilience, quality-led manufacturing, and portfolio expansion in high-value therapeutic areas. It follows that their investment strategy is balanced between risk mitigation and growth acceleration. On the mitigation side, Naprod Life Sciences is allocating funds to strengthen supply chain visibility and flexibility, including advanced demand-forecasting systems, buffer inventory strategies, and diversified logistics options. This helps ensure they are less susceptible to sudden spikes in input costs or transport delays that have recently been triggered by geopolitical tensions.
“At the same time, we are directing resources toward quality and capability enhancement, such as upgrading manufacturing technologies, investing in regulatory compliance infrastructure, and expanding into highgrowth product segments like oncology and specialty injectables. These areas not only command better margins but also deepen strategic value for global partners who increasingly prioritise reliable, high-quality sources,” explains Manish Jain.
Preparing for the next
There is no doubt that the old pharma playbook no longer works. The solution is to rewrite the rules of play and change the collective mindset.
As FOPE’s Harish Jain cautions, “We can futureproof ourselves only if we can evolve from being the “lowest cost generic supplier” into a trusted, technology-enabled, innovation-driven healthcare ecosystem. The next decade will not be defined only by FDA approvals or ANDA filings. It will be shaped by geopolitical fragmentation, AI-led disruption, climate and ESG pressures, supply-chain nationalism, biologics and precision medicine, and trust in quality systems. India already supplies ~20 per cent of global generics, but the old model of scale + low cost is becoming insufficient.”
Nair of RPG Life Sciences reveals that as disruptions can create short-term pressure on raw material availability, freight costs and lead times, RPG Life Sciences has proactively strengthened strategic procurement across key products, built adequate inventory levels and activated alternate sourcing programmes to minimise disruption risk.
Thus while they are closely monitoring the evolving geopolitical situation, Nair believes that as of now, there is no material impact on the business, and they do not foresee any significant disruption at this stage, given their current inventory levels. “We are also working closely with global customers on calibrated price pass-throughs, along with upside expected due to exchange rate fluctuations,” discloses Nair.
Turning threats into opportunities
All companies, large and small, are bullish on turning threats posed by geopolitical flashpoints into long term opportunities.
Spelling out the significant opportunities emerging from this flux, Lupin’s Swaminathan points out, “Global customers and healthcare systems are actively looking to diversify their supply base and reduce dependence on single geographies, which plays to India’s strengths as a reliable, high-quality, and cost-competitive manufacturing hub. There is also a clear opportunity for Indian companies to move up the value chain—whether in complex generics, specialty products, or biosimilars—where capabilities, scale, and regulatory track record become key differentiators.”
For Lupin, this creates an opportunity to strengthen their position through differentiated capabilities, global scale, and scientific depth. The focus, explains Swaminathan, has been on building resilience through geographically diversified operations, a balanced market mix across developed and emerging markets, investments in complex manufacturing platforms, stronger backward integration in selected areas, and disciplined quality and compliance systems.
Emphasising Lupin’s belief in the importance of advancing the value chain, Swaminathan predicts, “The future will increasingly favour companies with differentiated portfolios, complex technologies, strong regulatory track records, and the ability to serve global healthcare systems reliably during periods of disruption. In parallel, we continue to assess vulnerable links across the value chain and build mitigation strategies through alternate sourcing, strategic partnerships, manufacturing flexibility, and prudent inventory planning.”
It’s not just marque pharma names who are preparing to ride the tide. Naprod Lifesciences’ Manish Jain too believes that “volatility also brings distinct opportunities. There is a renewed global emphasis on de-risking supply chains, and India’s established pharma ecosystem is well positioned to attract long-term business from partners seeking reliable, qualityfocused manufacturing. By leveraging strong compliance records, regulatory expertise, and emerging capabilities in complex formulation processes, we can expand into new markets and reduce dependency on commoditised product lines. To address vulnerabilities, we are accelerating backward integration of critical inputs, expanding inventory safety cushions, and collaborating more closely with logistics partners to manage trade route risk. This combined approach balances short-term risk mitigation with long-term competitive positioning.”
Thus there are many emerging opportunities for companies that lay the groundwork today. Echoing his peers on how global customers are increasingly looking at supply chain diversification and long-term reliability, HAB Pharma’s Agarwal points out that this creates opportunities for Indian manufacturers with “strong compliance systems and stable operations.”
Thus the hard learnings of the current geopolitical crisis can turn into soft landings if companies work on vulnerabilities, leverage strengths and take calculated risks.
If evolution was a series of geological changes that ensured survival of the fittest and most adaptable species, geopolitical flashpoints will test the business instincts of many sectors. Pharma companies will be no different. CFOs and promoters of pharma companies will have to steer this evolution beyond geopolitical uncertainties.
viveka.r@expressindia.com
viveka.roy3@gmail.com