Sunpharma vs Cipla Q2 FY26

Sun Pharma reported a solid Q2 FY26 with consolidated revenue of INR 14,405 crore (+8.6% YoY) and EBITDA of INR 4,527 crore (+14.9% YoY), with EBITDA margin expanding 170 bps YoY to 31.3%. Growth was driven by India formulations (+11% YoY) and global innovative medicines (+16.4% YoY), while US generics declined 4.1% due to competition and lower lenalidomide sales. PAT grew only 2.6% due to a higher tax rate (24.7% vs 15.8%). Management guided for R&D spend at the lower end of 6-8% of sales and expects continued investment in Leqselvi and Unloxcyt launches. Key risks include US tariff uncertainty and potential generic erosion of lenalidomide.

Guidance read

R&D spend at lower end of 6-8% of sales: Management expects full-year R&D spend to be at the lower end of the guided 6-8% range. Unloxcyt launch in H2 FY26: Unloxcyt remains on track for US launch in the second half of FY26, with sales force already in place. Ilumya psoriatic arthritis filing in H2 FY26: Sun Pharma plans to file Ilumya for psoriatic arthritis indication in the second half of FY26. Incremental specialty spend of ~$100M in FY26: The company expects to spend around $100M in FY26 to support Leqselvi and Unloxcyt launches, with increases in Q3 and Q4.

Risk read

Key risks include US tariff uncertainty on innovative medicines — Potential tariffs on patented drug imports into the US could impact Sun Pharma's innovative portfolio, though generics are expected to be excluded.; Lenalidomide revenue decline — Lenalidomide sales have dropped YoY and are expected to be minimal in the second half, impacting US generics revenue.; Higher effective tax rate normalization — ETR increased to 24.7% from 15.8% YoY due to expiry of tax benefits, expected to hover around 25%, pressuring net profit growth.; Competition in alopecia areata market — Stagnation in prescriptions for existing targeted treatments could hinder Leqselvi's uptake, though management expects market growth..

Promise ledger

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

Cipla delivered an all-time high quarterly revenue of INR 7,589 crore (+8% YoY) with a robust EBITDA margin of 25%, driven by broad-based growth across One India, US Generics, One Africa, and EMEU. The US business contributed $233 million in revenue, with Cipla becoming the #1 player in the albuterol MDI market (22% share). The India branded business grew 7% YoY, with chronic mix improving to 61.8%. Management revised FY26 EBITDA margin guidance down to 22.75%-24% (from 23.5%-24.5%) due to higher R&D spend and declining Revlimid contribution. Key growth drivers include the tirzepatide (Yurpeak) launch in India, upcoming respiratory and peptide launches in the US, and continued momentum in EMEU. Risk: Revlimid revenue is expected to become immaterial from Q3, creating a near-term revenue gap that new launches may not fully offset.

Guidance read

FY26 EBITDA margin guidance revised to 22.75%-24%: Full-year EBITDA margin guidance lowered from 23.5%-24.5% due to higher R&D spend and declining Revlimid contribution. Generic Revlimid contribution immaterial from Q3 FY26: Revlimid revenue expected to be very small in Q3 and decline further as patent expires in January. Launch of four major respiratory assets by CY26: Includes generic Advair in Q4 2026 and three peptide assets including liraglutide. US revenue directional target of $1B next year: Run-rate expected to reach $1B in US revenue during next fiscal year, subject to approval timelines.

Risk read

Key risks include Revlimid revenue cliff — Generic Revlimid contribution expected to become immaterial from Q3 FY26, creating a revenue gap that new launches may not fully offset in the near term.; Execution risk on US pipeline launches — Delays in FDA approvals for key respiratory and peptide assets could impact the $1B US revenue target.; India branded business growth slowdown — India branded business grew only 7% YoY, below the market, due to weak acute season and team restructuring.; Tirzepatide exclusivity and competition — Potential competition from semaglutide generics and uncertainty over exclusivity terms with Lilly could limit tirzepatide upside..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.