ZYDUSLIFE

weak Q1FY26, Aims to regain growth through Novel Drugs

reported a weak Q1 FY26, with muted performances in its US formulations and consumer wellness segments offsetting growth in its international, India formulations, and API businesses. The company's India formulations segment, which accounts for 24% of sales, grew by 8% year-on-year, driven by its chronic therapies. In contrast, US formulations, which make up 49% of sales, grew by only 2.9% due to a reduced contribution from key drugs like Revlimid and Asacol. The consumer wellness segment was negatively impacted by early monsoon conditions affecting seasonal brands. Future Growth Drivers and Strategic Initiatives Novel Drugs: Zydus is heavily investing in a pipeline of novel drugs. Saroglitazar is in a Phase 3 trial for a new indication, with data expected by the end of 2025. Another novel drug, Desidustat, which is already approved in India for chronic kidney disease-related anemia, is showing positive Phase 3 trial results in China. Biosimilars and 505(b)(2) Pipeline: The company has a portfolio of 14 biosimilars and is partnering with regional players to expand into emerging markets. It is also developing a 505(b)(2) product pipeline, including a novel oncology product for which a new drug application (NDA) is expected to be filed in 2026. Foray into Medical Devices and Biologics: Zydus is organically building a facility for nephrology and cardiovascular devices and has acquired France-based Amplitude Surgical for orthopedic implants. Additionally, it is acquiring US-based biologics manufacturing facilities from Agenus to enter the global biologics contract development and manufacturing business. Financial Outlook: For FY26, management is aiming for double-digit growth, with the US business expected to grow in single digits. The company has guided for an EBITDA margin of over 26% for FY26, and R&D expenses are projected to be around 8% of sales to support these growth initiatives.