Next US fix could stanch Cipla's Revlimid bleed amid pricing pressure

Generics pipeline starts to pulse as Advair, Symbicort, and Abraxane prepare to hit the vein

Cipla, the country’s third-largest drugmaker by market value, was the top gainer on the Nifty 50 on Friday, rising over 3 per cent. While the April-June quarter (Q1) results for 2025-26 (FY26) came in ahead of estimates, it was the upbeat guidance for the US market that drove sentiment. 

Ahead of the quarter, most brokerages had expected weakness in the US business and pressure on margins. But those concerns were put to rest by the launch slate, margin performance in Q1, and the FY26 guidance. 

Investor focus remained on the US operations, especially the pricing pressure on the generic version of cancer drug Revlimid and Cipla’s ability to sustain its revenue trajectory to offset the loss. 

US sales in Q1 dropped 7 per cent year-on-year (Y-o-Y) due to competitive intensity in Revlimid generics. Motilal Oswal Research noted this was the third straight Y-o-Y decline in the segment. However, Cipla managed to cushion the impact through higher volumes and market share gains in key respiratory products, such as the generic version of albuterol, where it holds a 19 per cent share, and lanreotide (used to treat acromegaly), with a 21 per cent share. 

Despite the 7 per cent fall in US sales to $226 million, which accounts for 28 per cent of total revenue, the figure came in ahead of projections, which were pegged at around $220 million. The company has maintained its FY26 margin guidance of 23.5-24.5 per cent and is targeting $1 billion in US sales for 2026-27 (FY27), driven by new launches, including generic versions of cancer therapies Abraxane and Tasigna (nilotinib). 

Additional gains could come from the generic versions of asthma drugs Advair and Symbicort, along with two to three inhalation and peptide products in FY27. Cipla is also expected to roll out its first biosimilar, filgrastim, in the July-September quarter. 

Brokerages are split on the feasibility of the $1 billion target. Analyst Foram Parekh of BOB Capital Markets said, “Meaningful launches in the US will likely enable Cipla to achieve $1 billion in sales in FY27. Accounting for all the new launches following 

the loss of exclusivity on Revlimid generics, we expect sales, operating profit, and net profit to grow 6 per cent, 4 per cent, and 3 per cent, respectively.” The brokerage has a ‘buy’ rating and a target price of ₹1,771. 

Elara Securities noted that the company’s launch pipeline includes generics of Abraxane, Tasigna, Advair, Symbicort, and a handful of peptide drugs. Analyst Bino Pathiparampil remarked, “The target of $1 billion in US revenue in FY27 seems like a stretch. The sole first-to-file opportunity for the generic of Dovato, if it lands in FY27, could make this achievable. But we’re not building this in yet due to limited visibility on timelines. Even if it materialises, it will add little to valuation given its one-off nature.” 

While FY26 earnings estimates remain unchanged, Elara has raised projections for FY27 and 2027-28 by 8-9 per cent, based on a stronger US sales outlook that brings it closer to the company’s guidance. The brokerage has upgraded Cipla to ‘accumulate’ from ‘reduce’ and increased its target price to ₹1,670 from ₹1,465. 

Back home, Cipla’s domestic formulations business — 44 per cent of overall revenue — grew 5.9 per cent Y-o-Y. Slower growth in respiratory and anti-infective therapies, where Cipla has a larger footprint than its peers, weighed on performance. While consumer health and trade generics posted healthy gains, the prescription segment underperformed. Looking ahead, all three categories — prescription, trade generics, and over-the-counter — are expected to grow around 8 per cent Y-o-Y. 

Apart from the North American pipeline, Cipla is looking to expand its differentiated prescription offerings in India and improve its standing in the consumer health segment, Motilal Oswal Research said. 

Analyst Tushar Manudhane of the brokerage has a ‘neutral’ rating, citing the time it may take for these efforts to translate into commercial success across India and North America. His target price is ₹1,580.