NATCOPHARM

Struggles as Revlimid Windfall Fades

’s shares have dropped 38% from their 52-week high as investors grow wary of its volatile, high-risk business model. The company’s reliance on complex generics and Para-IV patent challenges has delivered blockbuster gains in the past, but earnings are now under pressure as its Revlimid opportunity fades and competition intensifies. - High-Risk Para-IV Strategy Natco specializes in niche, complex drugs—cancer treatments, injectables, peptides—and challenges patents through Para-IV filings. This strategy allows early generic launches but creates earnings volatility, as exclusivity periods are short-lived. - Revlimid Windfall Nears End Revlimid, Natco’s biggest success, doubled revenues and lifted margins from 14% in FY22 to nearly 50% in FY25. However, restricted volumes under its settlement with BMS/Celgene have eased, allowing rivals in. Natco confirmed most Revlimid earnings were realized in H1FY26, with steep declines expected thereafter. - Sharp Earnings Volatility Revenue fell from ₹1,371 crore in Q2FY25 to ₹475 crore in Q3FY25, with margins collapsing from 59% to 8%. For H2FY26, Natco guides quarterly revenue of ₹750–800 crore and PAT of ₹135–150 crore—a sequential decline of ~41% and ~71%. - Dependence on Few Products Analysts caution that near-term growth hinges on Revlimid, CTPR (insecticide Chlorantraniliprole), and upcoming launches like Risdiplam and Semaglutide. Both new drugs face regulatory and legal uncertainties, adding to earnings risk. Valuation remains stretched at 25x FY27 P/E. - Pipeline and Diversification Efforts Natco is advancing several complex, high-entry-barrier drugs and expanding geographically via the Adcock Ingram buyout in South Africa. While this reduces dependence on the US, meaningful contributions will take time. The market remains unconvinced until new products replace the fading Revlimid windfall.