CIPLA - Cipla Ltd. Share Price

Cipla Ltd. reported a steady revenue of INR 6,957 crores for Q1 FY '26, reflecting a 4% year-on-year growth and an EBITDA margin of 25.6%. The One India business crossed INR 3,000 crores for the first time, showcasing a 6% growth. The U.S. revenue for the quarter was $226 million, with Albuterol holding a 19.5% market share. Management acknowledges ongoing price erosion in some key products, particularly Revlimid, but expects growth to be supported by new launches.

Forward-looking, Cipla's management underlines several strategic initiatives:

1. The launch of a new division for differentiated triple therapy products, anticipated to yield strong benefits.
2. A target to achieve nearly $1 billion in U.S. sales by FY '27, primarily driven by the U.S. pipeline, including Respiratory launches such as generic Symbicort.
3. A commitment to maintain an EBITDA margin guidance of 23.5% to 24.5% for the full year.
4. Continued investment in R&D, with INR 432 crores allocated this quarter, representing 6.2% of revenue.
5. Expansion in the biosimilars market, with the first biosimilar launch in the U.S. expected in Q2 FY '26, signaling a significant milestone.

Management expressed confidence in overcoming current market challenges, expecting to regain growth momentum both in India and internationally, particularly emphasizing their strategic alignment for respiratory therapies and the significance of their New U.S. products in bolstering growth.

Here are the major questions asked during the Q&A section of Cipla Limited's Q1 FY26 earnings call, along with detailed responses:

Question 1: "How does our outlook on the U.S. business growth remain for FY '26 and FY '27 given the price erosion in Revlimid?"

Answer: "We launched partially in Q1, but the full momentum for Nilotinib and Paclitaxel isn't reflected yet. Revlimid will critically phase out, possibly leading to reduced sales in the first three quarters. However, our pipeline indicates that we should reach closer to $1 billion in U.S. sales in FY '27, depending on launch timings, which will include our respiratory launches like Symbicort."

Question 2: "Can you provide details about the imminent launch of the biosimilar in the U.S.?"

Answer: "The biosimilar we're launching is in supportive therapy, specifically filgrastim. Our partner has already made disclosures regarding this product. Competitive dynamics exist, but we aim to leverage our existing oncology presence and market understanding for effective market penetration."

Question 3: "On India business growth, given the strong momentum in consumer health, shouldn't the growth have been higher?"

Answer: "Yes, ideally, our growth should have been better. Unfortunately, both respiratory and acute segments grew only 4-5%, affecting our overall growth due to their large share in our portfolio. We've realigned our teams, and we're confident we can grow in line with the industry over the next few quarters."

Question 4: "What are your margin expectations, considering the U.S. pipeline and recent launches?"

Answer: "While I understand the expectation for higher margins, we maintain our guidance of 23.5% to 24.5% EBITDA margin for FY '26 due to several expenses. The revenue impact from Revlimid and the timing of new product launches will affect margins."

Question 5: "Will GLP-1 be a significant growth driver for the domestic business by FY '27?"

Answer: "Yes, if the market forms early next year, GLP-1 could be a significant growth driver for us. Given the promising trajectory observed in other markets, we believe Cipla can achieve a favorable position in this space."

Question 6: "Given ongoing competitive dynamics, what is the expected growth rate for trade generics?"

Answer: "We expect trade generics to grow at a rate similar to the overall market, around 8-10%. While competition is rising, we believe our significant brands in this segment will continue to perform well and drive growth."

These questions and answers provide insights into Cipla's strategies and expectations for the U.S. business, India operations, and market dynamics affecting their growth trajectory.