Cipla vs Dr. Reddy's Laboratories Q4 FY26

CI

Cipla

Q4 FY26 · Healthcare

Cipla delivered a strong Q4 FY26 with India business growing 15% YoY and North America revenue of $155M. The company achieved key milestones including generic Ventolin approval and crossing 12,500 Cr in India revenue. Management guided for FY27 EBITDA margins of 18.5-20% with sequential improvement, driven by US respiratory launches and India chronic portfolio expansion. The US business targets a $1B run-rate by FY27-end, supported by 4 respiratory approvals and a peptide launch. Key risk: geopolitical disruptions and war-related cost inflation could pressure near-term margins.

Guidance read

FY27 EBITDA margin guidance of 18.5-20%: Management expects EBITDA margins in the range of 18.5-20% for FY27, with sequential improvement and stronger H2. US business to reach $1B run-rate by FY27-end: Cipla targets a $1 billion annualized run-rate for US business by end of FY27, driven by respiratory and peptide launches. India business to deliver double-digit growth in FY27-28: Management expects strong double-digit and market-beating growth in India for FY27 and FY28. R&D spend to remain around 7% of sales: R&D investment will continue at approximately 7% of revenue, supporting complex generics and biosimilars pipeline.

Risk read

Key risks include Geopolitical disruption and war-related cost inflation — Ongoing geopolitical situation has started impacting operating expenses; if prolonged, could pressure margins.; Lanreotide supply disruption and remediation uncertainty — Lanreotide remains off market due to partner remediation; timeline for return is uncertain, with alternate supplier filing expected by Q4 FY27.; Indore facility regulatory overhang — Indore site still under regulatory scrutiny; while most filings shifted to US/Goa, any adverse outcome could delay future filings.; Execution risk in US respiratory launches — Achieving $1B run-rate depends on timely approvals and commercial execution of 4 respiratory assets; any delay could impact guidance..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Dr. Reddy's Q4 FY26 revenue (ex-SSA) was INR 7,969 crore, down 6% YoY, dragged by a INR 453 crore lenalidomide shelf-stock adjustment. EBITDA margin of 19.5% (adjusted) missed the 25% aspirational target, impacted by lower gross margins (48%) and higher SG&A. The base business (ex-lenalidomide) grew double-digits. Management expects FY27 gross margins above 50% and EBITDA margins near 25% as semaglutide launches ramp up. Key risks include delayed semaglutide approvals (Brazil) and competitive pricing erosion in U.S. generics.

Guidance read

FY27 gross margin above 50%: Management expects gross margins to improve above 50% in FY27, driven by semaglutide launches and cost improvement programs. FY27 EBITDA margin near 25% with semaglutide: EBITDA margin is expected to approach 25% in FY27, aided by semaglutide sales, though may be slightly below. FY27 R&D spend 7%-8% of revenue: R&D expenditure is expected to be in the range of 7%-8% of adjusted revenue in FY27. FY27 CapEx around INR 2,000 crore: Capital expenditure for FY27 is guided at approximately INR 2,000 crore, primarily for biosimilars and product-specific investments.

Risk read

Key risks include Semaglutide approval delays in Brazil — Brazil approval for semaglutide is delayed by 3-4 months, which could impact FY27 unit sales guidance of 12 million units.; Lenalidomide shelf-stock adjustment recurrence — A surprise INR 453 crore shelf-stock adjustment hit Q4 revenue; similar customer-driven adjustments could recur.; U.S. generics price erosion — U.S. generics revenue has been flat despite new launches, indicating significant price erosion that may continue.; CAR T and partnered asset discontinuation — Impairment of INR 135 crore on CAR T and INR 93 crore on partnered asset (Immutep) highlights R&D pipeline risk..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.