Cipla’s US recovery, biosimilar pipeline key to future growth prospects

ET Intelligence Group: Cipla‘s September-quarter earnings were impacted by a high base in the US business and weak sales of active pharmaceutical ingredients (API), leading to a softer year-on-year performance. However, the company’s revenue and net profit grew sequentially, driven by growth in its India business, sustained momentum in branded prescription therapies, and improving traction in the US market led by respiratory products and a better product mix. With new respiratory launches and growing biosimilar pipeline, the company remains optimistic about growth momentum in the second half of FY27.

India continues to remain the company’s biggest growth engine, outperforming the overall domestic market. It delivered double-digit growth supported by respiratory, cardiac, anti-diabetes and dermatology therapies. With the rising share of chronic therapies and new product launches across segments, Cipla expects to sustain market share gains in the domestic business.

After a challenging year in the US market due to the normalization of revenue from certain products, Cipla bets on a recovery driven by respiratory launches. It received approval for generic Advair, its first dry-powder inhaler approved from its US manufacturing network. It expects contributions from additional respiratory and peptide products over the coming quarters. The company plans to strengthen its organic pipeline through 45-50 filings over the next three years. It expects to end FY27 with over $1 billion in revenue from the US market compared with $780 million in the previous year. It has entered into an exclusive agreement with Qilu Pharmaceutical to commercialize a biosimilar version of the cancer drug, Keytruda in the US and Canada, which should act as a long-term growth driver.

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While operating margin before depreciation and amortisation (Ebitda margin) declined 630 basis points year-on-year to 18.7%, it expanded 200 basis points sequentially amid tracion in the domestic business. It is expected to improve further in the second half of FY27, supported by respiratory product launches and a favourable product mix. It has retained the FY27 Ebitda margin guidance of 18.5%-20%.

Backed by a net cash position of ₹9,823 crore, Cipla is actively evaluating inorganic opportunities, particularly in North America and Europe, with a focus on acquiring complex and differentiated products that can strengthen its specialty portfolio.

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Cipla’s stock has lost over 4% over the past three months, underperforming the 2.5% drop in the BSE Healthcare index. Despite weakness, the stock’s trailing price-earnings (P/E) multiple at around 38 is above its five-year average multiple of 27. The stock is likely to remain range-bound until a clear sign of recovery in revenue and profits emerges.