Alkem Lab — Q3 FY26 earnings call

Call held 13 Feb 2026

Management summary

Alkem Laboratories delivered a stable Q3 FY26, marked by 10.7% YoY revenue growth, primarily driven by strong international sales and adjusted double-digit domestic growth. A significant strategic move was the acquisition of a 55% stake in MedTech company Occlutech, aiming for substantial revenue and margin expansion in the coming years. While the generic business faced headwinds, the company's chronic and prescription segments performed strongly, and it addressed an exceptional item related to Labour Codes.

Highlights

  • Total revenue of INR 37,368 million, up 10.7% YoY, indicating stable performance in a dynamic environment.

  • International sales grew robustly by 26.6% YoY to INR 12,157 million, reflecting consistent execution.

  • EBITDA margin maintained at 22.2%, with EBITDA growing 9% YoY to INR 8,280 million.

  • Acquisition of Occlutech (MedTech) provides a new growth platform, targeting INR 1,000 crores revenue and 25% EBITDA margin in 3-5 years.

  • Domestic business, when adjusted for Q3 FY25 base effect, demonstrated double-digit growth, with the chronic segment growing in high teens and outperforming IPM in six therapies.

Concerns

  • Q3 FY26 domestic sales growth was reported at 5.5% YoY, impacted by a high base in Q3 FY25 due to distribution adjustments.

  • An exceptional item of INR 528 million was recorded due to the Government of India's notification regarding Labour Codes.

  • The generic business is facing headwinds and is flattish this year, with management noting it's a highly competitive market.

  • The Occlutech acquisition has a long payback period of 10 years without considering additional portfolio items, though this is expected to reduce with pipeline products.

Key financials

  1. Total Revenue 37,368 Mn +10.7%YoY
  2. EBITDA Margin 22.2%
  3. EBITDA 8,280 Mn +9%YoY
  4. R&D Expenses 1,390 Mn
  5. R&D % of Revenue 3.7%
  6. PBT 7,812 Mn +7%YoY
  7. Net Profit 6,360 Mn +1.6%YoY

What they filed

Q1 FY27: revenue up 10.9%, net profit down 22.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue3,415 3,374 3,144 3,371 4,001 +17%3,737 +11%3,603 +15%3,740 +11%
EBITDA753 759 391 739 921 +22%828 +9%517 +32%766 +4%
Net profit702 641 322 668 779 +11%653 +2%251 −22%521 −22%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
37,116 Mn Total
  • India Sales 24,959 Mn 67.2%
  • International Sales 12,157 Mn 32.8%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Additional investment for R&D projects (e.g., LA launch in Europe) for Occlutech ₹100 Cr
    • Additional investment for R&D projects (e.g., LA launch in Europe) for Occlutech ₹200 Cr
    So the initial investment will be of around INR1,100 crores. But yes, over 2 years, since we want to also accelerate a few of the R&D projects, as Kaustav spoke that they have LA, which is a great product in this segment. And we want to definitely accelerate launch of LA in at least in Europe market over the next 3 years. So, we will maybe invest INR100 crores to INR200 crores more over next 2 years to fund their R&D program.
  • Debt Debt disclosed
    • Refinance Refinance Occlutech's existing loan from 10% to 5-6% using corporate guarantee. ₹450 Cr
    I think there are some concerns on the PAT numbers because they have a loan also in their books of around INR450 crores to INR500 crores. The loan is currently at 10%. But yes, definitely, we have plans to reduce the interest loan since Alkem has such, say, cash equity in the market. So definitely, the PAT will also improve once the loan is supported by the corporate guarantee.
  • M&A Occlutech Acquisition · Closed · Consideration ₹[object Object] (undisclosed)

    Entry into high-growth MedTech market (ortho and cardio), platform for global expansion, strong R&D setup, product pipeline (PFO, Left Atrial Appendage occluder).

    Occlutech is EBITDA positive in CY26, targeting 10% EBITDA by FY27 and 23-24% in 3 years. Payback period is 10 years without additional portfolio, expected to be significantly lower with pipeline products.

    So the initial investment will be of around INR1,100 crores. But yes, over 2 years, since we want to also accelerate a few of the R&D projects, as Kaustav spoke that they have LA, which is a great product in this segment. And we want to definitely accelerate launch of LA in at least in Europe market over the next 3 years. So, we will maybe invest INR100 crores to INR200 crores more over next 2 years to fund their R&D program. ... First, this company is already EBITDA positive in the present year, which is financial year -- sorry, calendar year 2026. And our estimate is to have 10% EBITDA by FY '27, which will take us to around 23% to 24% in 3 years' time.

Guidance & targets

Revenue

  • MedTech (Occlutech) Revenue Revenue · 3-5 years · High confidence INR 1,000 crores
    So yes, I do believe in that. So in the next 3 to 5 years, revenue could be around INR1,000 crores and EBITDA would be around, say, 20%, 22%, 25% would take higher.

    — Sandeep Singh

  • MedTech (Occlutech) Revenue Revenue · CY26 · High confidence INR 600 crores
    Yes, probably around INR600 crores, we are estimating in the calendar year '26.

    — Kaustav Banerjee

  • MedTech (Occlutech) Revenue CAGR Revenue · next 5 years · High confidence ~14%
    And then subsequently, we will grow that number up to INR780 crores in yes, approximately 14% CAGR about -- for the next 5 years. Excluding the newer launches.

    — Kaustav Banerjee

Margin

  • MedTech (Occlutech) EBITDA Margin Margin · 3-5 years · High confidence 20-25%
    So yes, I do believe in that. So in the next 3 to 5 years, revenue could be around INR1,000 crores and EBITDA would be around, say, 20%, 22%, 25% would take higher.

    — Sandeep Singh

  • MedTech (Occlutech) EBITDA Margin Margin · FY27 · High confidence 10%
    First, this company is already EBITDA positive in the present year, which is financial year -- sorry, calendar year 2026. And our estimate is to have 10% EBITDA by FY '27, which will take us to around 23% to 24% in 3 years' time.

    — Kaustav Banerjee

  • MedTech (Occlutech) EBITDA Margin Margin · 3 years · High confidence 23-24%

    — Kaustav Banerjee

Investment

  • MedTech (Occlutech) Additional Investment Investment · 3-4 years · High confidence INR 200-300 crores
    And your question was on incremental cost. So, I think, more or less, maybe overall medtech .will take INR200 crores to INR300 crores more of investment in the next 3 to 4 years.

    — Kaustav Banerjee

Market Share

  • MedTech (Occlutech) Ortho Business Market Share Market Share · 5 years · Medium confidence 10%
    If I give you a volume perspective, we should be around 10% of the market by -- in the next 5 years' time.

    — Kaustav Banerjee

Product Launch

  • MedTech (Occlutech) PFO Approval Product Launch · by 2027 · High confidence Approval by 2027
    PFO is about to be launched, and we are expecting a market share -- I mean, we are expecting approval by 2027.

    — Kaustav Banerjee

  • Denosumab Biosimilar (Xgeva) US Entry Product Launch · 2026 end · Medium confidence End of 2026
    U.S. entry is going to be '26 end, hopefully.

    — Sandeep Singh

  • Denosumab Biosimilar (Xgeva) Europe Entry Product Launch · next couple of months · High confidence Very soon
    And Europe, we'll be entering very, very soon in the next couple of months.

    — Sandeep Singh

  • PFO Launch (US) Product Launch · June 2027 · High confidence June 2027
    So, as Kaustav spoke about PFO launch in U.S., that will be June '27.

    — Nitin Agarwal

Debt Cost

  • Occlutech Loan Interest Rate Debt Cost · soon · High confidence 5-6%

    From 10% today

    So we will not provide loans from Alkem India, but definitely, we will get it refinanced with help of quarter guarantee, the rate can be reduced from current 10% to 5% to 6% easily and this is the way we pay for our other subsidiaries also for working capital loans.

    — Nitin Agarwal

Growth

  • Domestic Business Growth Growth · YTD FY26 · High confidence 10%
    if we look at our YTD numbers, I think we are close to 10%.

    — Vikas Gupta

  • Domestic Business Growth vs IPM Growth · ongoing · High confidence 100-150 bps more than IPM
    I have always maintained that we will continue to grow at 100 to 150 basis points more than the IPM growth.

    — Vikas Gupta

  • Generic Business Growth Growth · next year · Medium confidence High single-digit to early double-digit
    I think we will be back to our high single-digit to early double-digit kind of growth even in generic business from next year.

    — Vikas Gupta

Financial Impact

  • MIP (PenG Derivatives) Impact Financial Impact · overall · Medium confidence INR 80-100 crores
    If the India players increase their supply, then clearly, the cost impact would be lesser on our balance sheet. But as of now, the way it looks like, it looks like overall close to, say, INR80 crores to INR100 crores impact, but some of this would get -- should get nullified by some of the market pricing because even our trade generic business, we have a big portfolio on that front. So we can pass it on to the customer.

    — Vikas Gupta

What to watch in Q4 FY26

Occlutech Debt Refinancing

next quarter/soon
Current 10% interest rate
Target 5-6% interest rate

Why it matters

Successful refinancing will significantly reduce interest expenses and improve Occlutech's profitability, contributing to overall group margins.

So we will not provide loans from Alkem India, but definitely, we will get it refinanced with help of quarter guarantee, the rate can be reduced from current 10% to 5% to 6% easily and this is the way we pay for our other subsidiaries also for working capital loans.

Risks & concerns

  • Impact of Labour Codes Notification

    medium

    An exceptional item of INR 528 million was recorded due to the notification by the Government of India regarding the Labour Codes.

    There is an exceptional item for the quarter, which includes the impact of INR528 million on a preliminary basis related to the notification by the Government of India regarding the Labour Codes.

    Management acknowledged

  • Headwinds in Generic Business

    medium

    The generic business is facing headwinds and is flattish this year due to a highly competitive market.

    Our chronic business is seeing very strong growth trajectory, both YTD as well as quarter for this year. We also have carved out our Alkem Wellness business as a separate entity, which is seeing certain headwinds. However, our prescription business is growing at a strong rate, which is reflected in IQVIA data as well.

    Management acknowledged

  • Impact of Minimum Import Price (MIP) on PenG Derivatives

    medium

    The MIP for PenG and its derivatives could have an overall impact of INR 80-100 crores, though some offset from market pricing is expected.

    But as of now, the way it looks like, it looks like overall close to, say, INR80 crores to INR100 crores impact, but some of this would get -- should get nullified by some of the market pricing because even our trade generic business, we have a big portfolio on that front. So we can pass it on to the customer.

    Management acknowledged

  • Long Payback Period for Occlutech Acquisition

    medium

    The payback period for the Occlutech acquisition is around 10 years without considering additional portfolio items, though it is expected to be significantly lower with pipeline products.

    But if you don't consider the additional portfolio, which we are going to launch or you don't consider LA, which is a big opportunity, the payback is around 10 years on this asset. But after considering LA or, say, a new set of products which can be launched under this platform, the payback will significantly be lower. As I said, it's 10 years, it can be significantly reduced. But it's very difficult to predict as of now.

    Analyst acknowledged

Q&A highlights

6 direct
MedTech Scale and Investment Direct
So in the next 3 to 5 years, revenue could be around INR1,000 crores and EBITDA would be around, say, 20%, 22%, 25% would take higher. But since your question was 2 to 5 years, I've answered that. And Kaustav, you can give more color to it, please.

Provides specific financial targets for the newly acquired MedTech business, outlining its potential contribution to Alkem's future growth.

Asked by Damayanti Kerai

Confidence in MedTech Scaling Direct
Yes. So, Kaustav, maybe you can go ahead, but I'll just say this that, of course, it's different. Therefore, we have a different team. We have a different company. And that's why we acquired this company because those skill sets, we don't have it. So we are very clear about it. We will run it independently. And it is different, but it falls in the health care. Yes, Kaustav, please.

Addresses concerns about Alkem's ability to operate in a new sector (MedTech) by emphasizing the acquisition of existing expertise and independent operation.

Asked by Damayanti Kerai

Occlutech Acquisition Rationale and Financials Direct
Very briefly, this is a research-oriented company, which has solved one of the biggest medtech problem in the world, which is being in high entry barrier markets. I mean, entry barrier markets, which is -- which include United States and Western Europe as well as Japan and Australia. And this segment is a very niche segment of cardiology. So, for us, it's more like a platform.

Offers a detailed strategic justification for the Occlutech acquisition, highlighting its market position, R&D capabilities, and high-barrier entry markets.

Asked by Saion Mukerji

Occlutech Ownership and Promoter Continuity Partial
So if you look at the shareholding, there are around more than 150 shareholders currently in the company and majority around 32% is held by the founder himself. And so the reason why we are buying 55% because the balance shareholders, they want to retain their shareholding and again is part of the, say, value creation, which we are going to do in the next 5 years together.

Clarifies the rationale behind acquiring only a 55% stake and confirms the continuity of the existing management and promoter, which is important for stability post-acquisition.

Asked by Saion Mukerji

Occlutech Payback Period Partial
See, as we said that this will be more for us, this will be a platform to access developed markets like Japan, U.S. and Western Europe. And there is a plan to also launch more number of, say, products in cardiovascular using this platform. But if you don't consider the additional portfolio, which we are going to launch or you don't consider LA, which is a big opportunity, the payback is around 10 years on this asset.

Provides insight into the long-term investment horizon for Occlutech and the dependence on pipeline products to shorten the payback period.

Asked by Neha M

Domestic Formulation Business Growth Direct
So I would disagree here because if you look at our YTD numbers, I think we are close to 10%. And if I split that out even further, like I mentioned, we have this year some headwinds in the generic business, and we carved it out as a separate entity. So, if you remove that, we are actually close to around 11% or 12% in that range.

Clarifies the underlying growth of the domestic business, distinguishing it from reported numbers affected by a high base and generic segment headwinds.

Asked by Kunal Dhamesha

Alkem's Capital Allocation Strategy Direct
So I think this is the first one, not many. You can't count Bombay and all that. That's a sneeze. Don't even bring it up. This is the first one. And many times, you all kept asking that you should acquire and acquire. So maybe we listen to you. Now what gives me confidence is what we answered in the first question. I think we believe in people. I think we have the best people in the medical devices. We have acquired a company, which I'm kind of repeating. So this is not an in-house development or in-house management. This is an acquisition, not only of company, but of talent. And yes and Kaustav, you can add on that if you want anything.

Addresses analyst concerns about a perceived shift in Alkem's historically conservative capital allocation strategy, emphasizing the strategic nature of the Occlutech acquisition.

Asked by Nikhil Mathur

MIP Impact on Gross Margin Direct
So see, of course, MIP is a very recent event. We are just waiting and seeing how the market pricing would unfold. If the India players increase their supply, then clearly, the cost impact would be lesser on our balance sheet. But as of now, the way it looks like, it looks like overall close to, say, INR80 crores to INR100 crores impact, but some of this would get -- should get nullified by some of the market pricing because even our trade generic business, we have a big portfolio on that front. So we can pass it on to the customer.

Provides an initial estimate of the financial impact from the Minimum Import Price (MIP) on PenG derivatives and potential mitigation strategies.

Asked by Nikhil Mathur

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Driven by International Sales and Adjusted Domestic Growth

Alkem Laboratories reported a total revenue of INR 37,368 million for Q3 FY26, marking a 10.7% year-on-year growth. This performance was significantly bolstered by international sales, which surged by 26.6% YoY to INR 12,157 million. While reported India sales grew 5.5% YoY to INR 24,959 million, management clarified that, adjusted for a high base in Q3 FY25, the underlying domestic business demonstrated double-digit growth, with YTD numbers close to 10%.

Strategic Entry into MedTech with Occlutech Acquisition

A key highlight of the quarter was the acquisition of a 55% stake in Occlutech, a MedTech company specializing in cardiology devices. This strategic move positions Alkem in a high-growth sector, with Occlutech targeting INR 1,000 crores in revenue and a 25% EBITDA margin within 3-5 years. The initial investment for this acquisition is INR 1,100 crores, with an additional INR 100-200 crores planned over the next two years to accelerate R&D, particularly for the Left Atrial Appendage occluder.

Robust Chronic Business and Market Outperformance in India

Despite headwinds in the generic business, Alkem's chronic business segment exhibited a very strong growth trajectory, expanding in high teens. The company showcased strong market share gains by outperforming the Indian Pharmaceutical Market (IPM) in six key therapies: anti-infectives (1.4x), vitamins & minerals (2x), pain (1.4x), antidiabetic (1.2x, over 2x excluding GLP-1), respiratory (1.2x), and derma (1.8x). This performance underscores the strength of its prescription business.

EBITDA Margin and Profitability Drivers

The company achieved an EBITDA margin of 22.2%, with EBITDA growing 9% YoY to INR 8,280 million. Net profit for the quarter was INR 6,360 million, a 1.6% YoY increase. R&D expenses accounted for 3.7% of total revenue, amounting to INR 1,390 million. Management expects Occlutech, currently EBITDA positive in CY26, to reach 10% EBITDA by FY27 and 23-24% within three years, further contributing to overall group profitability.

Addressing Debt and Future Growth Opportunities

Alkem plans to refinance Occlutech's existing loan of INR 450-500 crores, aiming to reduce the interest rate from 10% to 5-6% by leveraging its corporate guarantee. This move is expected to improve Occlutech's PAT. The company is also looking forward to the US entry of its Denosumab biosimilar (Xgeva) by the end of 2026 and Europe entry in the next couple of months, alongside the PFO launch in the US by June 2027, which are expected to drive future growth.

Impact of Labour Codes and MIP on Operations

An exceptional item of INR 528 million was recorded in the quarter due to the Government of India's notification regarding Labour Codes. Additionally, the Minimum Import Price (MIP) for PenG derivatives is estimated to have an overall impact of INR 80-100 crores. However, management believes that some of this impact could be mitigated through market pricing adjustments, particularly within its trade generic business portfolio.

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