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Informist, Wednesday, Feb. 5, 2025

By Akshay V. Johnson and Sunil Raghu

MUMBAI – Zydus Lifesciences Ltd. will increase its capital expenditure 20-30% over the next two years as it is scaling up in both domestic and international markets for which it requires higher capacities with different complex storage forms. The company also plans to build a medical devices business which will be funded by this additional capital expenditure, the company's management said in a post-earnings analyst conference call.

The company does not see any meaningful capital allocation change with regard to 505(B)(2). The management believes it will add three-four additional new licences through 505(B)(2) in the coming quarters. The company hopes to file at least one or two new 505(B)(2) in the coming one-three years, the management said. A 505(b)(2) application is a new drug application that contains full reports of investigations of safety and effectiveness required for approval of a new drug.

The company has a very robust pipeline for its India business. It comprises launching complex generics, including biologics, which are biosimilars, and a pipeline of anti-malaria trials, the management said. It expects higher growth in 2025-26 (Apr-Mar) than in the current financial year as the company has large product launches during the end of that period. 

In the biosimilar space, the company is currently focused on India and the developing market space, but the global market offers a great opportunity to expand, the management said. In countries such as Mexico, the company is among the few players that provide generic biosimiliars. 

Zydus Lifesciences Ltd. posted higher-than-expected growth in both its top line and bottom line for the December quarter. The drugmaker reported a double-digit on-year rise in net profit, the fastest growth for the quarter in four years. The company's consolidated net profit was up 30% on year at INR 10.24 billion. Its consolidated revenue of INR 52.69 billion for the December quarter was up 17% from the year-ago quarter. The company's gross margin saw a decline during the quarter as there were no Revlimid sales and a fall in sales of Asacol, the management said. 

The company's India business is on track to achieve better-than-market growth rates in the coming quarters. The drugmaker expects it can achieve an earning before interest, tax, depreciation, and amortisation margin of more than 23% in the coming one-two years. A strong execution and portfolio of products recently launched is helping the company to grow in all markets, the management said.

During the quarter, the company recorded foreign exchange gains of INR 1.82 billion, significantly higher than in earlier quarters. This was largely due to depreciation of the rupee. For the quarter, the company did not hedge its trade receivables for foreign exchange fluctuations, which acted in its favour and boosted its foreign exchange gains. The management expects the dollar to strengthen further, which will further improve its foreign exchange gains.

On Wednesday, shares of the company closed at INR 977 on the National Stock Exchange, up 0.3%.  End

Edited by Avishek Dutta

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