Cipla has been impacted by loss of sales in two main products for the US market in FY26. The new launches, which were supposed to offset the loss, have not taken off as expected. We earlier recommended investors accumulate the stock in March 2025, from where the stock has declined 8 per cent to date. The launch outlook for FY27 appears robust, with a couple of approvals already in place and the management guiding for further launches across FY27-28.

We reiterate our accumulate call for investors with a three-five year perspective in view of the launch pipeline for the US markets, while the Indian market also has strong prospects. Currently, the stock is trading at a one-year forward PE of 25 times (based on Bloomberg consensus estimates), which is close to its five-year average of 24 times. With earnings growth expected to accelerate to a 16 per cent CAGR in FY26-28 from a 3 per cent decline in FY24-26, valuations appear comfortable at current levels.

India and other markets

India, Africa, and Emerging and European (EMEU) markets account for a significant share of revenues and have delivered strong growth, as shown in the chart.

The Indian operation is driven by branded generics, trade generics (Jan Aushadhi) and consumer health divisions. The three divisions have reported strong growth in FY26 and are expected to continue with the momentum. The branded division in FY27 will be supported by the partnered launch of Mounjaro (Tirzepatide), branded as Yurpeak for weight-loss and diabetes. Cipla will procure from Eli Lilly and market the product in India.

The company has also launched Empagliflozin and Afrezza (inhaled insulin) in the diabetes category and acquired three brands from Pfizer for sales in India. The leadership position in respiratory, growth in cardiology and diabetes, and a steady inlicenced portfolio should sustain low double-digit growth in India for Cipla. A steady introduction of products from India and the US markets as branded generics in Africa and normal generics in EMEU should similarly drive strong growth in the regions.

The US pipeline

The US revenues declined 16 per cent year on year to $780 million in FY26 for Cipla. A large portion of the drop was expected, as generic Revlimid sales were expected to drop from January 2026 following the end of volume-limited sales agreement and full genericisation. But generic Lanreotide (accounting for more than $100 million of sales per year for Cipla in the US) were also stopped, as the manufacturing partner Pharmathen faced FDA inspections and manufacturing was halted. The company is working on two alternate suppliers, but the sales are expected to recover in early FY28 or so.

But Cipla has guided for an FY27 US sales’ exit run-rate of $1 billion, which implies hitting $250 million per quarter towards the end of the fiscal, based on its launch schedule. The company is eyeing the launch of four respiratory generics in FY27, of which it has the approval for gVentolin and expects to launch in the coming months. The long-awaited gAdvair, used in the treatment of asthma, is also expected along with gSymbicort and two more (undisclosed) in the year. The known assets have a large addressable market ($500-1,000 million) and low competition (around two-four market players including the innovator), and each product has the potential to generate $75-100 million in the first year of launch for Cipla. Similar to Lanreotide, Cipla is expecting to launch eight peptide or complex generics (three in FY27) as well, which have a strong revenue potential.

Loss of sales from Revlimid and Lanreotide will be felt for two-three quarters in FY27 as well. But the company’s aim to reach $250 million per quarter by FY27-end seems plausible depending on the launches and execution. The company will look to have four more respiratory filings and three more peptide/complex generics filings in FY28. It has also started on biosimilars (drugs derived from living organisms) with the first launch of a biosimilar in the US – filgrastim, with more products under study.

Financials, valuation

While Cipla revenues have declined 2.2 per cent in FY26 to ₹28,163 crore, the EBITDA margin has contracted by a big 500 bps to 20.9 per cent in FY26 owing to the gRevlimid loss. This resulted in EBITDA contracting around 17 per cent in FY26. The company expects an EBITDA margin of 18.5-20 per cent in FY27 owing to the loss and higher R&D expenses. The R&D expenses as a percentage of sales have increased 150 bps to 7 per cent in FY26 and are expected to remain in the range in FY27. The pipeline, including biosimilars, Oligonucleotides, peptides and respiratory products, are cost-intensive, as expenses relating to studies, filings and development are expected to be higher. Even other costs of employees and other expenses as a percentage of sales have increased 200 bps in FY26 owing to both lower revenues and higher absolute costs to support the larger infrastructure.

Cipla now operates a respiratory plant in the US along with remediation expenses (the Goa plant faced FDA inspections, while the Indore plant is expecting inspection). The company has levers to improve its EBITDA margins beyond FY27 either through higher revenue base (from the launches) or by a cost-control exercise . More importantly, the $1-billion exit run-rate excludes any contribution from Lanreotide, which could show up in FY28 adding to the operating leverage on existing assets.

Current Bloomberg consensus estimates for FY27 revenue, EBITDA and PAT growth are 11.1 per cent and 10 per cent respectively.

Additionally, the company has negligible debt and a net cash position of ₹10,526 crore (9 per cent of market cap) as of March 2026. The new management, after the departure of long-term CEO Umang Vohra, might be conservative in deploying the cash, but the company has sufficient fire power to add an inorganic growth lever as well.

Published on June 6, 2026