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Union Budget 2026: Impact on Pharmaceuticals and Healthcare with Recommendations

By Prime Research | Updated at: Feb 2, 2026 06:42 PM IST

Union Budget 2026: Impact on Pharmaceuticals and Healthcare with Recommendations
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Budget Highlights Impact Recommendations
Budget allocation on Healthcare expenditure – allocation for Department of Health and Family Welfare increased by ~10% YoY to INR 1,017 bn. Healthcare spending increasing will be positive for the sector. Although allocation for Ayushman Bharat scheme was muted at INR 95 bn (+6% YoY). No major direct beneficiaries.
Medical Tourism and Heal in India: Proposed to set-up five healthcare regional hubs in partnership with private sector and streamline e-visa facilities for international patients. Also, reduction in TCS from 5% to 2% on travel for medical treatment for aggregate of the amounts exceeding INR 1 mn. Medical tourism and Heal In India initiative will be positive for select hospital chains like Apollo Hospital, Max Healthcare, Fortis Healthcare, and Medanta with higher share of international patient mix. Diagnostic: Positive for Dr Lal Pathlabs, Metropolis, Vijaya Diagnostics, and Krsnaa Diagnostics.
Day Care Cancer Centers: Government will facilitate setting up of Day Care Cancer Centers in all district hospitals. Day care centers could pose risk for the hospital chains like HCG having day care clinic business. Neutral for Aurobindo, Dr Reddy’s, Zydus, Cipla, Sun Pharma for PLI scheme.
Budget allocation for Department of Pharmaceuticals increased by 36% to INR 59 bn. Allocation for Production Linked Incentive schemes was flat YoY to INR 25 bn for producing API & intermediaries. Lower allocation could slow down scale‑up of Jan Aushadhi which will reduce the risk of leading IPM companies.
Allocation of INR 100 bn over the next five years for development of BioPharma hubs under Biopharma SHAKTI (Strategy for Healthcare Advancement through Knowledge, Technology and Innovation). Targeting diabetic, oncology, and autoimmunity disease. Although allocation in FY26‑27 budget was just INR 5 bn. To provide relief for cancer and rare diseases. Positive for companies with Biologics portfolio such as Biocon, Dr Reddy’s, Lupin, Aurobindo, Eris Life, Alkem Labs etc.
Custom duty waiver on 17 cancer related drugs and added seven drugs for rare diseases on personal imports of drugs, medicines and Food for Special Medical Purposes (FSMP) used in their treatment. Positive for MNC Innovators like Novartis, Pfizer.

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