US Pharma companies: Pharma companies set for strong performance in March 2025 quarter amid earning weakness

ET Intelligence Group: Pharma companies are expected to stand out in the March 2025 quarter, offering stability amid broader earnings weakness. According to the average of estimates from 4 brokerages, Sun Pharmaceutical, Dr Reddy’s Laboratories, and Lupin are set to report healthy growth, driven by strong US portfolios and steady India performance. Cipla and Torrent Pharmaceuticals are likely to show resilience despite margin pressures, while Divi’s Laboratories may post moderate gains.

Sun Pharma is expected to post a 9% year-on-year revenue growth, supported by its US specialty portfolio and steady growth in chronic therapies in India. However, sequentially, revenue could decline by 4.5% on an average, due to weakness in emerging markets and seasonality. The operating margin before depreciation and amortisation (Ebitda margin) is expected to expand by 115 basis points year-on-year to 26.5%.

Divi’s revenue and profit may grow by 9% on year. According to analysts, gains from custom synthesis and contrast media could be offset by high base and slow domestic demand projecting Ebitda margin around 32%, down by 23 bpson year.

Cipla may report 10% on year revenue growth, higher from 7.4% last year. It will be driven by stable performance in US generics segment. However, it may fall quarter-on-quarter. “Sequential decline owes to lower domestic business led by seasonality, while US business will inch up with Lanreotide seeing partial normalisation,” said Equirus citing that Q4 was usually weak for Cipla and should show up during this year as well. DRL is poised to deliver a standout performance, with revenue projected to grow 18% year-on-year, led by US generics portfolio including gRevlimid. “We expect domestic sales to grow, led by a 6% growth in its organic business and contributions from the in-licensing deals with Sanofi and Bayer,” stated Kotak Securities. For Lupin, revenue may rise by 12% on year, driven by US launches such as gXarelto and improved inhalation therapy traction. Domestic growth may be modest due to seasonal softness. Net profit is expected to grow 108% due to low base. Margins may dip sequentially due to higher R&D costs and operating expenses.

Torrent could see a rebound in its contract manufacturing business and stable growth in the Indian market. Domestic formulation portfolio continues to be a strong anchor, and analysts note improving visibility in export markets.

Analysts remain upbeat on companies with a well-diversified US presence, lean cost structures, and strong domestic execution.