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Informist, Tuesday, May 19, 2026

 

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--Zydus Life: Medical tech business to deliver steady growth going forward
--CONTEXT:Comments by Zydus Life management at post-earnings analyst concall
--Zydus Life: Expect high-teen revenue growth in FY27
--Zydus Life: Expect single-digit sales growth in North America in FY27
--Zydus Life: Expect at least 24?ITDA margin in FY27
--Zydus Life:Expect co sales growth above India pharma mkt's by 200 bps FY27
--Zydus Life: Expect non-generics to be key growth drivers in next 3-5 yrs
--Zydus Life: Expect INR-15-bln capex in FY27
--Zydus Life:See US quarterly sales above $300 mln despite no Revlimid sales
--Zydus Life: Eyeing acquisitions globally to scale up business
--Zydus Life: Expect to launch Desidustat in China by Q2
--Zydus Life: Rupee depreciation enough to counter input cost rise

 

Eshitva Prakash and Avishek Rakshit

 

MUMBAI/KOLKATA – Zydus Lifesciences Ltd.'s management expects to see single-digit sales growth in North America for the financial year 2026-27 (Apr-Mar) and the quarterly revenue from the region is likely to stay around the $300 million mark in constant currency terms, it said. This comes as the company is getting no revenue from the high-margin generic Revlimid drug because of intense competition and is facing a tussle for Mirabegron sales in the US. Scaling up of its base business, de-stocking, new launches, and some contribution from Mirabegron sales helped US sales in the March quarter and should continue as drivers of growth, the management said in a post-earnings conference call with analysts.

 

"We are around the 300-plus to 310 range ($300 million-$310 million)... maybe we'll have Mira (Mirabegron) competition, which we have factored in, so we will see some erosion from the current base," the management said. "Also, we have said that our base business continues to do really well. So overall we are around the $300 plus million base."

 

The company expects its revenue to grow in high-teen figures in FY27, owing to strong domestic performance and expectations of scaling up its international business. "In India, we have now consistently demonstrated better than market growth, and we are thinking we will outperform the market for FY27," the management said. It has guided its sales growth to outpace the Indian pharmaceutical market's sales by 200 basis points. "On the international markets, we have seen very significant 40% growth for the year and 45% for the quarter, and we see that momentum continuing also in the current year," it said.

 

For the quarter ended March, the pharmaceutical company reported a consolidated net profit of INR 12.73 billion, up nearly 9% on year, far above the view on the street. The export-oriented company's bottom line was helped by the depreciation of the rupee but was limited by a one-time settlement fee paid to Astellas for the Mirabegron sales. Its consolidated revenue for the quarter rose over 16% on year to INR 75.87 billion, significantly higher than analysts' projection. Its North America formulation sales were down 6% on year at INR 29.52 billion. This region accounts for 40% of the company's total sales. The US formulations revenue for the quarter was $323 million in constant currency terms, the company said.

 

The company expects an earnings before interest, tax, depreciation, and amortisation margin of at least 24% in FY27. This is much lower than its FY26 EBITDA margin of 31.2%. "I think (in) FY27, looking at competition, also development competition, Mirabegron competition, expenses related to Saro (Saroglitazar) launch, we are expecting margins in excess of 24%. Wherever we see opportunity to improve our margins, we look at that, and that's what we continuously work towards, cost efficiencies," a company official said. "But it's very difficult to predict what will happen in the next 3-6 months," he added when asked about the impact of higher logistics cost due to the West Asia war. The management said the depreciation of the rupee has been enough to counter the rise in input costs.

The management will continue to look for inorganic growth opportunities, particularly in international markets and speciality segments, and it is comfortable with a net-debt to EBITDA ratio of 1. "We continue to look for bolt-on acquisition opportunities for our speciality (portfolio)," a company official said. The company is eyeing capital expenditure of INR 15 billion in FY27. Its organic capital expenditure for FY26 was INR 17.15 billion. 

 

The company expects to spend around 8% of its total revenue in FY27 on research and development. This is largely similar to its R&D expenditure in FY26, which was 8.4% of revenue. "(We spent) around 50% on generics and value-added generics and the rest 40-plus per cent was on biologics and vaccines," the management said about the March quarter R&D spending. "As we move forward we will probably see a little bit higher uptake on new chemical entity and biologics and probably a similar kind of number on generics." The management expects non-generics to be key drivers of growth in the next 3–5 years.

 

The company expects to launch the drug Desidustat in China by the September quarter, but the management refused to give guidance for its sales growth in the country. China's National Medical Products Administration approved the drug on Mar. 13. The oral tablets are indicated for the treatment of renal anaemia in non-dialysis adult patients suffering from chronic kidney disease.

 

Speaking about the weight-loss drug Semaglutide, the company's management said its co-marketing strategy for the drug has helped itself, Lupin Ltd., and Torrent Pharmaceuticals Ltd. to gain sizeable market share. "So I think there's a good choice on partners that together we control a very meaningful part of the market share on Semaglutide which is also very important. And I think it will only grow from strength to strength. What we have been able to demonstrate is a very reliable supply, a very strong product with a highly reliable (injectable) pen, which has been a challenge in the market," the management said.

 

The company's medical technologies business has seen significant growth in revenue. For the March quarter, its revenue from this segment rose to INR 3.3 billion from just INR 17 million in the year-ago quarter. Going forward, it expects revenue growth from this business to be "steady".  

 

The company released its March quarter earnings during market hours Tuesday. Its shares ended at INR 1,018.90 on the National Stock Exchange, up 2.8% from Monday.  End

 

US$1 = INR 96.53

 

Edited by Rajeev Pai

 

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