Indian pharmaceutical sector, perhaps, is passing through its worst phase after achieving 30 years of steady growth. The industry, actually, grew largely on account of its export orientation from the mid eighties. Today, it is under serious threat from the same countries which used to import Indian drugs for their price competitiveness and quality. Both API and generic exports from India are facing tough non tariff barriers from the developed world and some of the developing countries. Overall profitability of Indian pharmaceutical companies is thus getting badly hit with no prospects of a silver lining. This is clearly visible from the financial performances of 100 listed pharmaceutical companies during 2008-09. A Pharmabiz study of 100 listed companies shows that their net profit declined by 40.3 per cent to Rs 6,075 crore in 2008-09 from Rs 10,173 crore reported in the previous year. This is for the first time such sharp decline in profit growth is being noticed in this sector. The overall sales of these companies however, showed an increase of 22.8 per cent at Rs 84,589 crore during 2008-09 from Rs 68,893 crore reported in the previous year. The other income of these companies, however, showed a notable growth during the year. The other income of these 100 companies increased by 32.3 per cent to Rs 2,951 crore during 2008-09 from Rs 2,231 crore in the 2007-08. Aurobindo's other income went up to Rs 174.34 crore from Rs 24.94 crore, Cipla's other income moved up to Rs 365.68 crore from Rs 273.23 crore, Glenmark's to Rs 174 crore from Rs 45.82 crore and that of Ranbaxy it increased to Rs 270.62 crore from Rs 136.23 crore. Huge interest burden on account of expansion programmes has contributed to the lower profitability of the companies during the year. Interest costs of 100 companies rose by 69.3 per cent during 2008-09 to Rs 2,442 crore from Rs 1,442 crore in the previous year. Wockhardt has made a hefty provision of Rs 270.40 crore for interest payment as compared to Rs 163.80 crore in the previous year. The company's borrowings reached Rs 4,235 crore at the end of December 2008 from Rs 2,900 crore in the previous year. Ranbaxy's interest burden went up by 46 per cent to Rs 205 crore. Perhaps the most disappointing feature of the performance of this industry during 2008-09 is the huge losses incurred by India's two prestigious companies, Ranbaxy with a sales of Rs 7421.36 crore and Dr. Reddy's with a sales of Rs 6790.37 crore. While Ranbaxy showed a net loss of Rs 951.20 crore during the year as against a profit of Rs 774.58 crore in the previous year, Dr. Reddy's loss is Rs 917 crore during the year as against a profit of Rs 438.13 crore in the previous year. Wockhardt, with a sales of Rs 3592.60 crore, also reported a net loss of Rs 138.90 crore during the year as against a profit of Rs 385.60 crore in the previous year. Some of the other loss making large companies with annual sales of over Rs 1000 crore are Piramal Healthcare, Aurbindo Pharma, Glenmark, Biocon, Ipca Labs and Alembic. The surprising fact is that these losses are despite reasonable growth they achieved in sales during the year under review. What is evident from these results is the fact that industry's profitability is down on account of a fall in export volume and margins. Available performance figures of pharma companies so far in the current year are also not very encouraging. Indian pharmaceutical industry has to, therefore, rework its growth strategy in this totally changed environment.