Abstract: One of the most dynamic and rapidly expanding industries in India, the pharmaceutical sector contributes significantly to the country's economic expansion and leaves its mark on the global healthcare landscape. For investors, analysts, and politicians, understanding the risk-return dynamics of the industry has become essential due to ongoing regulatory changes, rising global demand, and the incorporation of cutting-edge technology. This study seeks to explore the financial performance and investment prospects of selected Indian pharma companies by evaluating their associated risks and returns. Investigating the relationship between risk and return in the Indian pharmaceutical industry, with a particular focus on both large-cap and mid-cap companies, is the main goal of this study. Performance is evaluated using key financial metrics like Return on Equity (ROE), Return on Assets (ROA), Earnings Per Share (EPS), Price-to-Earnings (P/E) ratio, and Debt-to-Equity ratio. Given the global reach and regulatory dependence of pharmaceutical activities, the analysis takes into account a variety of hazards, including commercial, operational, regulatory, and currency-related risks. Using secondary data from annual reports, SEBI filings, financial databases, and stock market records over the previous five years, a quantitative research approach is applied. To evaluate stock volatility and returns, a variety of statistical techniques are employed, such as regression models, standard deviation, beta, and correlation analysis. Furthermore, Jensen's Alpha, the Treynor Ratio, and the Sharpe Ratio are used to assess how well businesses provide returns relative to the risks they take. The findings show notable variations in the risk-return profiles of the examined enterprises. Generally speaking, large-cap pharmaceutical companies provide more reliable returns with comparatively reduced risk exposure. Smaller and mid-cap firms, on the other hand, have more room for expansion but also experience more volatility. The study also demonstrates how risk levels and profitability are significantly impacted by elements including foreign exposure, regulatory clearances, and research and development (R&D) spending. In conclusion, this study emphasizes how important thorough financial and risk analysis is to the Indian pharmaceutical industry. The results help firms improve their financial strategy, investors who want to make data-driven judgments, and regulators who want to create a stable economic climate. Continuous risk and return monitoring is crucial for attaining sustainable development and competitive advantage as the industry develops and grows internationally.

Keywords: Indian pharmaceutical sector, Large-cap companies, Risk-return analysis

| DOI: 10.17148/IARJSET.2025.125138