Higher costs drag Zydus Lifesciences' Q1 profit down 36%; revenue rises 22%

Revenue from operations rose 22 per cent to Rs 8,017 crore, led by India formulations, consumer wellness and international markets, while EBITDA margin contracted

Ahmedabad-headquartered Zydus Lifesciences reported a 35.9 per cent year-on-year (YoY) decline in consolidated net profit to ₹939.8 crore for the first quarter of FY27, as a sharp rise in expenses offset strong revenue growth. Revenue from operations rose 22 per cent YoY to ₹8,017 crore, driven by robust performance in its India formulations, consumer wellness and international markets businesses.

 

The decline in profitability was largely due to a steep increase in costs. Purchases of stock-in-trade nearly doubled during the quarter, while other expenses rose around 45 per cent YoY, weighing on margins. As a result, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 7.6 per cent YoY to ₹1,929.4 crore, with the EBITDA margin contracting to 24.1 per cent from 31.8 per cent a year ago.

 

 

On a sequential basis, revenue increased 5.7 per cent, while net profit declined 26.1 per cent and EBITDA fell 24.5 per cent.

 

Sharvil Patel, managing director, Zydus Lifesciences, said, "We continue advancing into an innovation-led, patient-centric organisation. Our branded portfolio now exceeds 55 per cent of revenues. Backed by diverse manufacturing and robust quality systems, we will further strengthen our core businesses and expand our market share."

 

During the quarter, the company invested ₹642.4 crore in research and development, equivalent to 8 per cent of revenue, while organic capital expenditure stood at ₹585.2 crore.

 

The pharma business, which accounted for 78 per cent of consolidated revenue, reported sales of ₹6,090 crore, up 8.6 per cent YoY.

 

The India formulations business registered revenue of ₹1,815.8 crore, up 19.5 per cent YoY, contributing 23 per cent of consolidated revenue. Growth was broad-based across chronic, acute and super-specialty therapies, with the company outperforming the Indian pharmaceutical market (IPM) in cardiology, diabetology, gynaecology, anti-infectives, pain management, oncology and nephrology. Its chronic and sub-chronic portfolio now accounts for 54.2 per cent of domestic sales.

 

The North America formulations business reported revenue of ₹3,097.9 crore, down 2.6 per cent YoY, though it grew 4.9 per cent sequentially. The segment contributed 40 per cent of consolidated revenue. During the quarter, the company filed five ANDAs, received approvals for nine ANDAs, including four tentative approvals, and launched 11 new generic products. It also launched Nufymco, its first biosimilar in the US market, and completed the acquisition of Assertio Holdings to strengthen its specialty business.

 

The international markets formulations business posted revenue of ₹973.5 crore, up 34 per cent YoY, accounting for 12 per cent of consolidated revenue. The growth was driven by strong demand across key markets.

 

The API business reported revenue of ₹180.4 crore, up 14.5 per cent YoY, contributing around 2 per cent to consolidated revenue, while the alliances and others segment declined 11.1 per cent to ₹22.4 crore.

 

The consumer wellness business was the fastest-growing segment during the quarter, with revenue surging 67.2 per cent YoY to ₹1,429.2 crore, accounting for 18 per cent of consolidated revenue. Domestic business grew 5 per cent, driven by strong performance in skin and hair care as well as food and nutrition brands, while the international business, including the Comfort Click portfolio, delivered 25 per cent growth on a like-to-like basis.

 

On the innovation front, the US Food and Drug Administration granted priority review to the New Drug Application for Saroglitazar Magnesium for the treatment of Primary Biliary Cholangitis.

 

The company also received approval in India to initiate Phase III clinical trials of Desidustat in patients with sickle cell disease, advanced its biosimilar pipeline and expanded its vaccine programme with progress in typhoid, chikungunya and measles-rubella vaccines.