Summary
Cipla Limited - Q3 FY26 Earnings Call Summary Friday, January 23, 2026, 4:00 PM IST
Event Participants
Executives 4 Achin Gupta (MD & CEO Designate), Ashish Adukia (Global CFO), Diksha Maheshwari (Head, Investor Relations), Umang Vohra (MD & Global CEO)
Analysts 10 Abdulkader Puranwala, Bino Pathiparampil, Chirag Dagli, Damayanti Kerai, Kunal Dhamesha, Neha M., Nitin Agarwal, Shashank Krishnakumar, Shrikant Akolkar, Surya Narayan Patra, Tushar Manudhane, Vivek Agarwal
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹7,074 crores | Flat YoY; significantly impacted by the planned decline in generic Revlimid sales. |
| EBITDA Margin | 17.7% | -630 bps YoY; decline driven by lower Revlimid contribution and higher R&D investments. |
| Gross Margin | 62.8% | Impacted by product mix and one-time R&D material/API purchases for the oligonucleotide portfolio. |
| R&D Investment | ₹494 crores | +37.4% YoY; represents 7% of revenue, focused on product filing and peptide development. |
| Profit After Tax (PAT) | ₹676 crores | 9.6% of sales; includes a one-time exceptional charge of ₹276 crores for New Labor Code transition. |
| Net Cash Position | ₹10,229 crores | Post dividend and Galvus payments; demonstrates strong liquidity despite strategic acquisitions. |
| North America Revenue | $167 million | Sequential decline due to Revlimid billing cycle end and Lanreotide supply challenges. |
| India Business Growth | 10% YoY | Driven by double-digit growth in branded prescription (10%) and chronic therapies. |
Geographic & Segment Commentary
- One-India: Revenue grew 10% YoY, with the branded prescription business also up 10%. Key chronic therapies outperformed the market: Urology (+15%), Anti-diabetes (+13%), and Cardiac (+13%). Respiratory crossed the ₹5,000 crore threshold (IQVIA MAT Dec '25), outperforming therapy IPM by 400 bps.
- North America: Reported $167 million in revenue. While Revlimid declined, the base business (ex-Revlimid) grew in double digits. Market share for Albuterol MDI stood at 22%; however, Lanreotide supply is restricted until H1 FY27 due to partner manufacturing issues.
- Emerging Markets (EMEU) & South Africa: EMEU delivered its fourth consecutive $100M+ quarter (+7% YoY). South Africa saw strong secondary growth (+6.3%) despite primary revenue weakness caused by temporary channel destocking.
Company-Specific & Strategic Commentary
- Chronic Shift: The chronic portfolio now constitutes 62.3% of the India business, supported by the launch of Yurpeak (Tirzepatide) and Afrezza (inhaled insulin).
- Strategic Acquisitions: Signed definitive agreements to acquire Inzpera Health Sciences (pediatric wellness) and acquired perpetual rights for Novartis’ Galvus for ₹1,100 crores.
- Pipeline De-risking: Advancing alternate site filings for Lanreotide and focusing on in-house manufacturing for upcoming respiratory launches to protect gross margins.
- Leadership Transition: Umang Vohra is preparing to hand over CEO responsibilities to Achin Gupta to lead the next growth phase.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 EBITDA Margin | ~21% | Revised from earlier targets due to Lanreotide disruption and R&D step-up. |
| US Launches | 6–8 Assets (FY27) | Includes 4 respiratory (inc. Advair) and 4 peptide assets; 3 respiratory assets are from US sites. |
| Lanreotide Resupply | H1 FY27 | Temporary pause at partner Pharmathen’s site for remediation; production currently halted. |
| US Revenue Trajectory | $1B Target (Revised) | Guidance likely to be adjusted downward due to the timing of Lanreotide supply resumption. |
Risks & Constraints
| Risk | Context |
|---|---|
| Supply Chain Disruption | Lanreotide production is temporarily paused following nine USFDA 483 observations at partner Pharmathen’s facility. Recovery is not expected until H1 FY27. |
| Concentration Risk | Significant revenue and margin pressure observed as the generic Revlimid contribution phases out, necessitating flawless execution of the FY27 launch pipeline. |
| Regulatory Oversight | The Indore facility is awaiting re-inspection, while upcoming respiratory launches remain contingent on successful FDA reviews of US and India manufacturing sites. |
Q&A Highlights
US Pipeline & Lanreotide
- Question: What is the impact of Lanreotide and the timeline for recovery? (Tushar Manudhane)
- Answer: Production stopped in December following the November inspection. Resumption is expected in H1 FY27. Cipla is evaluating alternate sites for future de-risking (Achin Gupta/Ashish Adukia).
- Question: How significant are the upcoming respiratory launches? (Chirag Dagli)
- Answer: Two of the four respiratory assets are “big” opportunities where Cipla expects to be the sole generic for a substantial period. These could rank among the company’s top 3 products by revenue (Umang Vohra).
Margins & Financials
- Question: Why did EBITDA margins drop to 17.7%? (Bino Pathiparampil)
- Answer: The decline is due to the loss of high-margin Revlimid, a 150-200 bps increase in R&D spend (now 7% of sales), and higher manufacturing/talent investments for future readiness (Ashish Adukia).
- Question: What is the nature of the ₹1,100 crore payment? (Damayanti Kerai)
- Answer: This was for perpetual trademark and manufacturing rights for Galvus, sitting as a capital commitment/intangible on the balance sheet (Ashish Adukia).
India & New Products
- Question: Strategy for GLP-1/Obesity market? (Surya Narayan Patra)
- Answer: Focusing on Yurpeak (Tirzepatide) via Eli Lilly partnership. Management believes Tirzepatide’s dual-action makes it a preferred option even as Semaglutide generics eventually enter at lower price points (Achin Gupta).
Key Takeaway
Cipla delivered a stable Q3 FY26 with revenues of ₹7,074 crores, successfully navigating the expected drop in generic Revlimid sales through 10% growth in the One-India business and double-digit growth in the US base business. Profitability was pressured, with EBITDA margins landing at 17.7% due to the Revlimid exit and a strategic step-up in R&D to 7% of revenue. A significant headwind emerged via a supply disruption for Lanreotide at a partner site, expected to persist until H1 FY27. Strategically, the company is pivoting toward complex generics, with a robust FY27 pipeline featuring four respiratory and four peptide assets, including generic Advair and Victoza. While FY26 margin guidance is moderated to 21%, the aggressive expansion into chronic therapies and the acquisition of the Galvus brand underscore a transition toward a more sustainable, differentiated portfolio. The focus remains on regulatory clearances for the Indore facility and the timely execution of high-value US launches to offset the loss of exclusivity in legacy products.
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