Schedule M: The Cleanup That Could Create Pharma Multibaggers

A few months ago, tragic news surfaced in the state of Madhya Pradesh. It was regarding the death of fourteen children. The cause of death was kidney failure.

The unsettling reason for this was consumption of cough syrup made in India. Post the outrage, the manufacturing facility was sealed and the owner arrested.

This was not an isolated accident. In recent years, Indian drug manufacturers have been linked to similar casualties abroad, from Africa to Central Asia.

Such incidents have been a dent to the so called 'pharmacy of the world' - a claim that India has spent decades to make.

Indian companies supply affordable medicines to millions across geographies. Cost efficiency and scale have been our calling cards. Where we keep failing is the compliance and regulatory oversight.

Regulators are finally acknowledging this. After years of soft nudges, the Indian pharmaceutical industry is now being pushed for a regulatory reset.

The Drugs Controller General of India has announced the enforcement of Schedule M norms from 1 January 2026.

On paper, Schedule M is not revolutionary. It simply lays down the bare minimum manufacturing standards that any drug factory should follow. These include aspects like factory design, maintenance, and hygiene to safety testing, staff training, quality assurance systems, documentation, and process validation.

The idea is to ensure that patient safety is not left to chance. More importantly, these norms align Indian manufacturing with global benchmarks. For an industry with global aspirations, this order was long overdue.

You see, India has over 10,000 pharmaceutical manufacturing units. Most of these are small and medium enterprises that came into existence and flourished when regulations were lighter.

With Schedule M deadline approaching, most of these entities are struggling to upgrade infrastructure or raise the capital required to comply. As per media reports, less than 4,000 drugmakers may meet the Schedule M requirements in time. In other words, more than 60% of India's pharma manufacturing base faces an existential crisis.

There are obvious short-term risks. Drug shortages are a real possibility, at least in certain categories. Prices could see upward pressure. But from a long-term lens, Schedule M implementation marks a strong structural shift for domestic Pharma.

You see, Indian pharma manufacturing industry has been highly fragmented and competitive. Schedule M changes that equation. This, compliance becomes a moat.

As weaker players exit or are forced to scale down, business will naturally gravitate towards the ones that are compliant, have strong balance sheets, systems, and scale to meet the new standards.

Consolidation may finally arrive. For compliant manufacturers, this could lead to gaining market share, improving capacity utilisation, and potentially earning better margins.

This is where select contract manufacturers come into focus.

Akums Drugs & Pharmaceuticals stands out as the largest CDMO in the Indian market, with roughly 30% share of outsourced manufacturing for domestic pharma companies.

Twenty-six of the top thirty Indian pharma firms are its clients. While India and other developing markets remain core, Akums has been steadily preparing for regulated markets, particularly Europe, by getting its facilities approved.

As Schedule M enforcement tightens, Akums is well placed to absorb incremental business. Higher volumes, better capacity utilisation, and operating leverage could quietly reshape its profit profile.

Innova Captab is another name worth tracking. Again, a CDMO and branded generics player, it works with fourteen of India's top fifteen pharma companies.

Over 70% of its revenue comes from the domestic market, and it claims the third largest finished tablet and capsule manufacturing capacity in the country.

The management has articulated an ambition to double revenues over three years, while gradually increasing exposure to regulated markets. In a post Schedule M world, that ambition may find a more supportive environment.

Windlas Biotech is third on my watchlist. Among the top five domestic formulation CDMOs by revenue, Windlas serves fifteen of the top twenty Indian pharma companies.

It has bigger contribution from chronic and subchronic therapies, segments expected to grow at better rate within India Pharma space. It owns Intellectual Property (IP) rights for formulation technology of 99% of its products , helping with better control and client stickiness.

While exports are currently a small part of the mix, the company is steadily exploring emerging and semi - regulated markets.

Please note that no view is implied on any of the stock names above.

Regulatory changes are rarely comfortable and never popular. But every once in a while, they redraw the competitive landscape in ways that create long term winners.

Schedule M feels like one such moment for Indian pharma. As the industry cleans up its act, capital will follow credibility. In that migration of trust and scale, the next phase of value creation may already be taking shape.

For investors, it's worth finding who will emerge stronger on the other side.

Warm regards,


Richa Agarwal
Editor and Research Analyst, Hidden Treasure
Quantum Information Services Private Limited (Research Analyst)