Sunpharma vs Cipla Q1 FY26

Sun Pharma reported Q1 FY26 consolidated revenue of INR 13,786 crore, up 10.1% YoY, driven by India formulation growth of 13.9% and global Innovative Medicines growth of 16.9%. EBITDA came in at INR 4,302 crore (margin 31.1%), aided by favorable product mix and lower material costs. Reported PAT was INR 2,279 crore, down 19.6% YoY due to exceptional items of INR 818 crore (SCD-044 impairment and GxMDL settlement). Key highlights include the U.S. launch of Leqselvi for alopecia areata and positive phase III data for ILUMYA in psoriatic arthritis. Management guided for R&D spend of ~6-7% of sales and $100M incremental launch costs for Leqselvi and UNLOXCYT. Risks include ongoing FDA warning letters at three facilities and potential pricing pressure on lenalidomide.

Guidance read

ILUMYA PsA filing by end of CY2025: Sun Pharma plans to file for psoriatic arthritis indication for ILUMYA before end of calendar year 2025. UNLOXCYT launch in H2 FY2026: UNLOXCYT will be launched in the U.S. in the second half of FY2026, pending label update. Incremental $100M cost for Leqselvi and UNLOXCYT in FY2026: Management expects to incur approximately $100 million in direct costs (excluding amortization) for the launches of Leqselvi and UNLOXCYT during FY2026. Effective tax rate around 25% for FY2026: CFO guided for an effective tax rate of approximately 25% for the full fiscal year, up from 16-17% last year.

Risk read

Key risks include FDA warning letters at three facilities — Halol, Mohali, and Dadra facilities remain under FDA warning letters, limiting generic approvals and U.S. supply flexibility.; Lenalidomide pricing pressure — Generic lenalidomide continues to face pricing erosion, impacting U.S. generic business performance.; Leqselvi and UNLOXCYT launch execution risk — New product launches may face slower-than-expected formulary coverage or market adoption, impacting revenue ramp.; Potential U.S. tariffs on pharmaceuticals — While currently exempt, pharma may face tariffs after the 232 investigation, which could impact U.S. business margins..

Promise ledger

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

Cipla reported Q1 FY26 revenue of INR 6,957 crore (+4% YoY) with EBITDA margin of 25.6% (flat YoY) and PAT of INR 1,298 crore (+10.2% YoY). India business crossed INR 3,000 crore for the first time in a Q1, growing 6% YoY, but branded prescription growth was muted due to slow respiratory/acute market (4-5% growth) and sales force realignment. US revenue was $226 million, impacted by price erosion in a large product, but new launches (NanoPaclitaxel, Nilotinib) and Lanreotide recovery provide cushion. Management maintained FY26 EBITDA margin guidance of 23.5%-24.5%. Key risks include Revlimid revenue phasing uncertainty and slower India branded growth recovery.

Guidance read

FY26 EBITDA margin guidance maintained at 23.5%-24.5%: Management reiterated the full-year EBITDA margin range despite Q1 margin of 25.6% being above the range, citing potential Revlimid phasing and R&D investments. US revenue target of ~$1 billion by FY27: CEO stated pipeline (including respiratory launches like generic Symbicort) should get US revenue closer to or surpass $1 billion by FY27. India branded business to grow in line with IPM in next three quarters: COO expressed confidence that India branded prescription business will grow at industry rates for the remaining quarters of FY26. Biosimilar launch in US expected in Q2 FY26: Company signed agreement to launch first biosimilar in US (supportive care in oncology) via partnership; own biosimilars expected by 2029-30.

Risk read

Key risks include Revlimid revenue phasing uncertainty — Management could not provide precise timing of Revlimid revenue decline, which may impact quarterly US revenue and margins.; Slower India branded prescription growth — India branded business grew only ~3% (ex-consumer), impacted by slow respiratory/acute market and sales force realignment; recovery may take longer.; Indore facility reinspection risk — Indore facility is due for US FDA reinspection within the next year; any adverse outcome could disrupt US supplies.; GLP-1 market competition and execution — Management acknowledged GLP-1 market will be crowded; Cipla's strategy is still evolving and may face challenges in capturing share..

Promise ledger

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