ABSTARCT Indian Pharmaceutical sector plays a pivotal role in the economic development of the country. In the recent years, Indian Pharmaceutical Industry has reached to a higher level through its various continuous efforts. Presently, pharmaceutical industry in India has its market size around US $ 20 billion and it is estimated to reach at US$ 55 billion by 2020 in the near future. Due to rapid development in the Pharmaceutical industry and increasing competition, it has become necessary to reduce the cost. Pharmaceutical industry ranks 3rd in the world in terms of volume. It comprises of more than 20000 registered units. Pharmaceutical Companies can achieve the sustainable success if proper steps will be taken regarding the cost reduction practices. The present study attempts to analyze the cost position of Aurobindo and Panacea Pharmaceutical companies through Common-size cost statement & Total revenue and total cost statement.