Zydus Lifesciences Q1 FY27 earnings call

Zydus Lifesciences commenced FY27 with strong double-digit growth, reporting consolidated revenues of ₹80.2 billion, a 22% increase year-on-year. The operating profitability was robust, with an EBITDA margin of 24.1%, resulting in an EBITDA of ₹19.3 billion and a net profit of ₹9.4 billion. The company's net debt to EBITDA ratio stood at a healthy 0.7 times as of June 30, 2026, reflecting sustained momentum across all key businesses.

The India branded formulations business continued its market outperformance, achieving a strong 20% year-on-year growth during the quarter. This growth was broad-based, with the business growing faster than the market in super-specialty, chronic, and acute segments. Key therapy areas like cardiology, diabetology, gynecology, anti-infectives, pain management, oncology, and nephrology showed strong performance. The contribution of chronic and sub-chronic portfolio increased to 54.2% as per AWACS MAT June 2026, an improvement of 360 basis points over the last four years.

The international markets formulations business delivered strong growth, posting revenues of ₹9.7 billion with a 34% year-on-year increase. The North America business, encompassing the US and Canada, showed resilience with revenues of ₹31 billion, up 5% quarter-on-quarter. In the US generics segment, Zydus filed 5 ANDAs, received 9 approvals (including 4 tentative approvals), and launched 11 new products. The US specialty business achieved significant milestones with the launch of Nufymco™ Injection (Ranibizumab), its first biosimilar in the US, and the acquisition of Assertio Holdings to strengthen commercial capabilities.

The Consumer Wellness business recorded substantial growth, with revenues increasing by 67% year-on-year to ₹14.3 billion. This was driven by a 25% like-to-like growth in the international business, including the Comfort Click portfolio. Domestically, the business grew 5% year-on-year, with skin & hair care growing 35% and food & nutrition growing 16%. The medical devices space registered revenues of ₹2.8 billion, with ongoing investments aimed at enhancing capabilities in focused therapies for long-term differentiated value creation.

On the NCE research front, the USFDA granted priority review for Saroglitazar Magnesium for primary biliary cholangitis. In India, regulatory approval was received to initiate Phase III clinical trials for Desidustat in sickle cell disease, in collaboration with ICMR. The company also initiated a Phase III clinical trial in India for its second ADC Biosimilar. In vaccines R&D, Phase II clinical trials for the bivalent typhoid conjugate vaccine were completed, and Phase I trials for the chikungunya vaccine were initiated, with the MR vaccine dossier submitted to WHO and accepted for review.

Zydus Lifesciences plans a capital expenditure of around ₹1,500-₹1,600 crores for FY27, allocated across various projects including new facilities (SEZ 3, CAR-T, vaccines DS), R&D expansion, and land acquisition for wellness. Despite the investment phase for new initiatives and acquisitions, the company maintains its FY27 EBITDA margin guidance of 24%+. Management aims to improve EBITDA margins to a 28-30% range in the medium term as the branded portfolio's share of total revenue is expected to exceed two-thirds.