Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Cipla Limited (NSE: CIPLA) Q4 2026 Earnings Call dated May. 13, 2026
Corporate Participants:
Diksha Maheshwari — Head of Investor Relations
Achin Gupta — Managing Director & Global Chief Executive Officer Designate
Ashish Adukia — Global Chief Financial Officer
Analysts:
Unidentified Participant
Sidharth Negandhi — Analyst
Tushar Manudhane — Analyst
Damayanti Kerai — Analyst
Neha Manpuria — Analyst
Vivek Agrawal — Analyst
Presentation:
Operator
Ladies and gentlemen, Good day and welcome to the Cipla Limited Q4FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. We have with us today Mr. Achin Gupta, MD and Global CEO Mr.
Ashish Adukya, Global CFO and Ms. Diksha Maheshwari, Head Investor Relations. I would now like to hand the conference over to Ms. Diksha Maheshwari. Thank you. And over to you, Ma’. Am.
Diksha Maheshwari — Head of Investor Relations
Thank you. Sagar. Good afternoon. Welcome to Cipla’s Q4FY26 earnings call. I’m Diksha Maheshkari from the Investor Relations team at cipla. Let me draw your attention to the fact that on this call our discussion will include certain forward looking statements which are predictions, projections or other estimates about future events. These estimates reflect management’s current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied.
CIPLA does not undertake any obligation to publicly update any forward looking statement whether as a result of new confirmations, future events or otherwise. I hope you have received the investor presentation that we have posted on our website. I would like to request Ajin to repo.
Achin Gupta — Managing Director & Global Chief Executive Officer Designate
Thank you Diksha. Good afternoon everyone and thank you for joining us for our fourth quarter earning call for financial year 2026. 2026 was a year of milestones for us. We completed our 90th anniversary for the business and we achieved significant milestones across all of our businesses. One India, North America, One Africa and emu. In India we crossed a significant threshold with the business surpassing 12,500 crores in revenues. Underscoring the strength and resilience of our domestic franchise which is our largest franchise in North America.
The successful Generic Ventolin approval from our U.S. Facility marked an important strategic inflection point and reinforced our R and D capabilities. Our One Africa business continued to deliver market beating growth and our EMEU operations scaled meaningfully to become a 400 million plus business unit. Together these achievements highlight our disciplined execution and our commitment to sustainable as well as diversified growth across geographies. Now let me touch upon the individual businesses.
Our One India business delivered a robust performance this quarter growing at 15% year on year driven by strong double digit growth across branded prescription trade generics as well as consumer health. Full year growth stands at 9% bioi on the branded prescription business. Our key chronic therapies, respiratory, anti diabetes, cardiac and urology delivered a strong double digit market growth. Our chronic mix stands at 60% as per IQVR mat March 26 Fourochord, our leading inhalation brand surpassed a revenue of 1000 crores reaffirming its position as a respiratory market leader.
Meanwhile, Diator, our cardiac brand has established itself as a 650 crore brand delivering 25% YoY growth. This year we expanded our presence in the ITM by adding 4 brands with revenues exceeding 100 crores bringing the total to 33 such brands and our footprint in the top 300 brands in the industry now has 23 such brands. This year our growth has also been helped by a series of successful differentiated product launches across the core therapies. In respiratory, we launched products into the inhalation franchise including Foracort G Synchrobreze, Siphaler and the Triple combination Voltido Trio which are strengthening adherence while delivering therapeutic benefits in antimicrobial resistance.
We launched Remdri Sip N Med, Esplocip which underlines our presence and leadership in resistant and critical infections and AMR. In urology, we launched a novel product called Stricter which expands our leadership in non antibiotic management of recurrent UTIs. In our diabetes franchise we launched SGLT2 LED portfolio including empaglifosil and in dermatology we launched an innovative solution Perfecta for scar management. Together these launches reflect our execution strength. It reflects our focus on complexity and our commitment to driving sustainable growth through improved patient outcomes.
During the year we also enhanced our pipeline and portfolio through strategic partnerships. We entered into a collaboration with LI Lily for your peak, making our entry into the fast growing obesity segment with Best in class molecules. Our partnership with Mankind Corporation of US brought Afrezza India’s first rapid acting inhaled insulin, reinforcing our focus on differentiated diabetes solutions and we also gained exclusive rights to Pfizer’s key established brands, further strengthening our access to strong brands in the ipn.
Additionally, the acquisition of Inspera Healthcare enhanced our portfolio on pediatric and wellness product sites. Put together these efforts meaningfully enhance our portfolio and reinforce cipla’s long term growth ambitions. On trade generics side, we continued the strong growth momentum delivering double digit growth Y o Y for the quarter as well as for FY2. This performance was driven by a focused execution across distribution, a robust pipeline of strategic new product launches and meaningful advancements in technology enabled operations.
We will continue to expand portfolio and use that as a key driver for growth. With 17 new launches planned this year, our consumer health business continued its strong upward growth trajectory with Nicotex, Omnidel and Cipladine consolidating their number one positions in their respective segments. The business is driving very healthy secondary growth and actively exploring opportunities to invest in products and channels to further expand our distribution network. Operating profitability has improved in CSL reflecting the strength and scalability of our consumer health strategy.
Coming to North America, the business reported quarterly revenue of US$155 million and an annual revenue of $780 million. Supported by demand in our differentiated portfolio and a tele based business, Albuterol market share increased to 19.6% as per IQVR Matt March 26. During the year we advanced our portfolio with several key assets including Liraglutide, Nintendo and Dapagliposin. Notably, we received regulatory approval for the first AB rated generic Ventolin with CGT representing the first commercial MDI product to be manufactured from our US Facility.
This milestone reinforces our growing confidence and capability to deliver complex generics not just from India but also from our US Manufacturing facility. We are expecting to launch this product within the coming months. Our GOA facility together with two US Facilities is well equipped to support the launch of Kohler all four respiratory assets planned for FY27 enabling a seamless and well coordinated supply to the market. Our One Africa business grew at an impressive 14% year on year growth rate during the quarter with a full year growth of 7% YoY in USD terms powered by firm performance across key markets.
In the private market, our secondary growth outpaced the market growth with 6.6% versus 4.8% for the market. In EMU, our focus strategy on deep penetration has built a strong foundation enabling the business to breach the $400 million US revenue mark. This is despite the significant volatility that has been happening in the recent months because of the war. The business remained resilient during the quarter, navigating geopolitical uncertainty and disruptions with strength and discipline. It was led both by DTM and B2B categories alongside consistent margin stability and internal pipeline assets.
On the regulatory front, during the year, U.S. FDA conducted and concluded inspections at three of our manufacturing facilities in India, Bomasundhra in Bangalore, Saitek at Mumbai and Medispray in Goa, all of these inspections resulting in a VAI or NAI classification. This accomplishment reflects our steady dedication to quality compliance and operational excellence. A quick Update on our U.S. Pipeline we continue to prioritize organic investments with sustained focus on advancing R and D capabilities for the US Market.
In particular, we remain very confident in our US Business outlook which is supported by a pipeline of nearly 40 to 50 products to be filed over the next three years and this includes 12 first to file and 8v2 opportunities that they are targeting. In the respiratory portfolio, five assets have been filed including the generic Ventolin. Four of these are expected to be commercialized in FY27. They’re also going to deepen this pipeline with four additional respiratory assets scheduled for filing over the next 24 months.
Importantly, we remain committed to sustainability and innovation with two respiratory assets incorporating green propellants expected to be filed over the next 24 months as well in peptides and complex generics, eight assets are already filed with select launches projected between FY27 and 28. We aim to file three more peptides and complex generic assets in the next 12 to 24 months. Additionally, we are working on oligonucleotides and we are also having two global biosimilar assets. One is undergoing clinical study under an IND and the other is in earlier stage of development.
We see biosimilars as a very large and under penetrated opportunity and with the recent change in some of the guidelines we believe this to be an upcoming almost $200 billion opportunity with around 100 such biologics expected to lose exclusivity over the next decade. So we are going to enhance our efforts on biosimilars. We have a JV with Chemvel which is focused on execution which has an initial pipeline of respiratory assets and oncology assets. We are looking at adding at least one to two assets on in house biosimilar development through this JV which will really build our presence in the biosimilar space over the next five to seven years.
On the back of these ambitions and with a very solid foundation of execution, we are also accelerating our AI LED transformation. Our strength has always been on execution across quality, manufacturing and regulatory and with the AI transformation we aim to become a leading AI led pharma organization. We have invested in robust data and technology foundations which allows us to scale this up in a structured and sustainable way and also in a very timely fashion. So we will be focusing a lot on driving efficiency, productivity and better decision making with the help of AI over the coming through coming years.
I
Ashish Adukia — Global Chief Financial Officer
Would now like to invite Ashish to present the financial and operational performance.
Achin Gupta — Managing Director & Global Chief Executive Officer Designate
Thank you, thank you Archen I’d like to present the key financial highlights for the quarter and the financial year. So we reported a quarterly revenue of 6,541 crore and as a result of that we ended the year with 28,160. The EBITDA margins for the quarter stood at 15.2% and 21% for the year. And like every time, this does not include other income. The gross margin after material costs stood at 65.6% for the quarter and 66% for the full year and this was primarily driven by the product mix in the revenue.
Total expenses for the quarter include the employee cost and other expenses which stood at 3,296 crore. This was higher by about 10%. YoY annually the expense was 12,689 crore which was again a similar percentage increase. YoYo. The increase in employee cost reflects a planned investment in talent both to support our markets as well as to strengthen our manufacturing readiness in both India as well as in the US Overall the operating expenses also include continued investment in R and D which stood at 509 crore which is at about 7.8% of the revenue for the quarter.
So and for the year it was 1,974 crore which is at about 7% of the revenue. These investments are aligned with our pipeline priorities. It enables our new launches and it builds readiness for the upcoming product. As a result, we are scaling up our annual filings like it has been highlighted by Acharya. In addition, we have started to see some impact of ongoing geopolitical situation within the operating expenses which we are closely monitoring. In the near quarters we don’t see much a meaningful impact but in the future quarters as the inventory gets consumed, you see that impact coming through.
For the quarter PAT stood at 555 crore representing 8.5% of sales with an effective tax rate of 22.2%. On the full year basis the PAT amounts to 3879 crore accounting to 13.8% of sales while the ETR for the year is 25.9%. Our ROIC stood at 22.9% for the year and of course PAT also assumes a certain impairment that we’ve had during the quarter. Our free cash flow generation and operating efficiency endures to drive healthy net cash position. As of 31 March 2026, the debt on our balance sheet including the lease liabilities stood at 614 crore with net cash equivalent balance at 10,526 crore.
Looking ahead, our three key priorities will include for one India it could be to focus on execution to sustain the growth momentum and to outperform the market in branded generic, trade generic as well as in consumer wellness. We will further strengthen our presence in chronic therapies including diabetes, cardiology, urology and dermatology while maintaining the robust trajectory that we’ve built in respiratory. In North America we will concentrate on enhancing our commercial execution and accelerating new product introductions and our aim is to cross $1 billion mark as a run rate towards the end of this financial year that is FY27 in South Africa.
Our focus will be on improving the private mix with correction in tender contribution in EM eu. Our top priority is to drive top line growth by deepening penetration in core markets while maintaining a strong margin trajectory. Looking ahead to FY27 supported by a ramp up of new launches and investments that we’ve made across our manufacturing facilities and ongoing expense optimization initiatives, we expect the EBITDA margins to be in the range of 18.5% to 20% and this would be actually achieved with a sequential improvement quarter on quarter, with the key improvement being in the second half of the year and an overall basis you will have 18.5 to 20% kind of a range.
And this guidance does not include any contribution from land yield in FY27. I like to thank you for your attention and will revert back to the moderator to open up for the questions and answers.
Operator
So should we open the floor for questions?
Achin Gupta — Managing Director & Global Chief Executive Officer Designate
Yeah, sure, please.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press Star and then one on their Touchstone phone. If you wish to remove yourself from the question queue, you may press Star and then two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Vishal Manchanda from Systematics. Please go ahead.
Unidentified Participant
Hi good evening and thanks for the opportunity. During the quarter did this kind of book any shelf stock adjustment for Revlimid?
Achin Gupta
No, I think we had shared this in the last quarter as well. We did not have any SSA adjustments.
Unidentified Participant
Okay. And second on generic Ventolin launch that you are expected to do next month. So just wanted to understand if the you know the Innovator is supposed to launch a green version of Ventolin sometime by third quarter of this financial year. So as hypothetically if the Innovator is replaced is able to replace all of their Ventolin product with the new version, would that impact cipla.
Achin Gupta
Right. Generic to the existing ventulin. Just switching to another variant is, I think that will be a process, you know, which is not an automatic process under the US law at this point of time. So we do not anticipate any near term impact of that change as and when the transition starts to happen.
Unidentified Participant
Okay. And if you could update on the respiratory pipeline, the key assets, adware, Simbicot, QR Flow went.
Achin Gupta
So I think as we had guided, we were expecting four approvals this year. Ventolin has already got approved. We are, you know, having different gold dates for different products. So during the year we are expecting, you know, advair from the court and then one other advice. So this will happen during, I think, you know, H1 and 1 is H2 as well.
Unidentified Participant
Okay. And what is holding back ADV for so long?
Achin Gupta
I think your question is probably more historic. If you recall, we had OAI at our indoor facility so we had to take transfer to the US which caused the delay. But now we’re ready with everything. So it’s just a matter of receiving the approval.
Unidentified Participant
And just one final one, sorry, just
Achin Gupta
To complete, went through a pre approval inspection on our US facilities for this particular product.
Unidentified Participant
Got it. And just one final one. Do you expect to see any benefit out of the EU FTA for your respiratory portfolio? Because you source a lot of the basic, basic devices from Europe
Achin Gupta
At this point we’re not expecting any meaningful impact of that. It’s more business as usual at this point in time.
Unidentified Participant
Is there a change in the duty structure there or it’s. It remains the same pre and post euft,
Achin Gupta
It remains the same. So there is no benefit as such. And in EU we already selling respiratory devices which are in house. So you know, there’s no significant benefit that we see coming from.
Unidentified Participant
My question was more from a sourcing standpoint like the raw, the key raw materials that come from Europe, would they be cheaper for you?
Achin Gupta
So we get some raw materials from there, especially on the devices side, but there’s no any such benefit that we have out there.
Unidentified Participant
Okay. Okay, thank you.
Operator
Thank you. The next question comes from the line of Siddharth Nagandi from cwc. Please go ahead.
Sidharth Negandhi
Hi, thanks for the opportunity. Just wanted to understand the specific initiatives around AI which you mentioned. If you could share any specific initiatives that you’ve taken and, and anything, any other pilot initiatives that you see scaling up in future.
Achin Gupta
AI is a broad based implementation that we’re targeting which will focus across multiple functions and the difference between what used to happen in the past versus now. Is we are focusing on end to end processes versus small limited use cases. So this will be, we have implementations across quality, regulatory, corporate functions and a lot of the R and D related use cases as well. So the idea is to use it in a way that helps obviously faster and better decision making but also ultimately gives us productivity benefits.
Sidharth Negandhi
Right. And on the biosimilars front, just want to understand in terms of your strategy for biosimilars, are you looking at in licensing or are you looking at your own development and what sort of a pipeline and timeline are you looking at for that both from a US and EU perspective? And is that, is that sort of accelerated given the new FDA draft guidelines?
Achin Gupta
Yes. So we have predominantly an in house strategy where we have two assets currently under development for developed markets. One of them is already under clinical trials. Under an IND of us, we will be adding one to two assets each year which will then therefore start resulting into a pipeline of 6 to 8 in house assets over the next five to eight years. On top of that we are considering a limited amount of in licensing where there are near term opportunities that are not within our in house portfolio.
So for those we are open to considering some in licensing opportunities as well. But we see this as a newer space, more so because of the changes to the guidelines which have, you know, placed us in a good position where we, you know, can run these like the other complex projects and we can benefit from the overall economics of developing these projects.
Sidharth Negandhi
Thank you so much.
Operator
Thank you. The next question comes from the line of Surya Patra from Philip Capital. Please go ahead.
Ashish Adukia
Yeah, thank you for this opportunity. Sir, my first question is on the U.S. Revenue guidance. What you are talking about about a billion dollars by the end of this year. Sir, if. And also simultaneously you have mentioned that in Your guidance for 27 you have not factored lantiotite. So that means in your expectation for FY26 you are not considering lantreotype and obviously this linalidomide is not there. So if we kind of deduct these two product revenue from the $780 million annualized revenue of FY26 for us.
So the number what you’re talking about is almost like double the size of base US business for of FY26. So what is the kind of bridge that you are talking about where from this revenue buildup that will happen? Can you give some clarity, sir?
Achin Gupta
Yeah. So the guidance I just wanted to clarify is a billion dollar run rate by the end of the year. We are not guiding for a billion dollar revenue during the year. And the reason for that is because a lot of this is contingent on pipeline maturing. So we have one approval already in hand. As we mentioned, there are three other respiratory approvals, there’s one big peptide approval and there are three other products which have already got approved in the year. Smaller assets, etc.
Unidentified Participant
So
Achin Gupta
As these products get approved, our run rate will keep improving and we will get to that billion dollar by the end of FY27. Which puts us in a very good position because what historically you know, we were shy of that. We would want to see the year ending at a good run rate of billion in the U.S.
Ashish Adukia
Okay, so that means kind of in the second half we will see a run rate of almost like $100 million incremental revenue versus the quarterly generate in the first half.
Achin Gupta
Yeah, yeah.
Ashish Adukia
Okay. And now is it fair means since you have mentioned that Lander Tide you have not factored while guiding the margin for the year. So is it. So what is the outlook that we are giving for Landreotide for this year and for the subsequent period given that kind of total disruption that we are currently seeing for that molecule?
Achin Gupta
So for Landry we have you know, the partner who’s working on the remediation efforts that’s in full swing and we are helping them as much as possible on navigating that path. So I think maybe by next quarter we’ll have closer visibility on their exact remediation timelines which will also include a reinspection from so that we can come back and guide after a quarter. But in parallel we have also identified alternate supplier for this alternate manufacturing site which will be based out of the US So the objective is to be able to file by early next year, next calendar year or so, Q4 of financial year.
That gives us a two pronged approach to overcome this. So I think you know, it will come back. It’s a very interesting opportunity being a long acting injectable and you know, once we are able to resolve either of these two and now we have two shots at full, we will be back in this. Definitely from an FY28 perspective it will be
Ashish Adukia
On Ventolin. That is the next question. So when means we. We already mentioned that we have a around 22% kind of or more than 20% kind of market share in the the Albitrol market itself in the US So now with another variant of Alvitrol is getting approved. Do you find any changes to the kind of market dynamic in terms of the pricing or in terms of the Competition or in terms of your scope in Albitrol as a whole, whether it will lead to incremental business or not since it is a variant of Albatrol only and the prescription would be based on Albitral HFA that way.
Achin Gupta
Yeah, no, these are different products because they get substituted to the different innovator products. So it’s a different ndc, different market and we have CGT on the generic venspin so we will actually be exclusive for six month period and we expect a significant uptick. There is no cannibalization that will happen on the other variants which is a generic to, you know, another variant of thin molecules. So we’re more likely to take the share from the existing Venturin suppliers rather than, you know, going to eat from the other franchise.
Okay,
Ashish Adukia
Just last one question from my side sir. Is there any scope of rationalization of the cost on the cost front? See, because if the revenue is likely to slide on the US front particularly so are we likely to see any reduction in any cost line item for FY27?
Achin Gupta
So look, there are two parts working on number of productivity enhancement measures which will help us optimize the cost including some of the tech related transformation that we spoke about. But you know the short term there are disruptions because of the war situation on sourcing side. So right now we’re having visibility to what we’ve seen so far. But you know if it prolongs, that’s something that is, you know that some still yet to be quantified. But to answer your question on basic efficiencies and productivity.
Yes, we are working on that and it will materialize as we go through during the year. There’s one more point which I think you should keep in mind is we had invested in our North America facilities for these complex products and so far the cost has been there in the last quarter or two but the revenues have not commensurately come. So we will see that corresponding revenue with the new launches and therefore the economies of scale will improve as we go along.
Ashish Adukia
Sure, sir. Yeah. Thank you. Wish you all the best.
Operator
Thank you. Your next question comes from the line of Tushar Manutane from Motilal Oswal Financial Services. Please go ahead.
Tushar Manudhane
Yeah, thanks for the opportunity. So just on the R and D connecting R D spend overall almost 2000 crores and but at the same time very few and also so is it that the R and D spend per anda is significantly higher maybe for FY26, 25 compared to the earlier. Let’s Say the philosophy of RD spend for Anda. That’s my first question.
Achin Gupta
Yes. Actually we have gone up including some first to file which are on oligonucleotide side as well. So we’ve gone into more respiratory, more peptide and more oligo which is resulting in higher spend per filing. And some of these also involve litigation cost as well. So that also leads to higher R and D spend which has got everything in that RD spend that you see both API cost, your R&D’s that you buy, litigation, etc etc. And of course above these oligonucleotides etc. We go outside to CRO CMOs as well.
So there is also cost involved in that.
Tushar Manudhane
So typically at least for. Without getting into product specific detail but let’s say for respiratory and oligo products like per end of RD spend, broad number you would like to call out.
Achin Gupta
I think that’s very case specific. So it’s difficult to call out an average number. We are guiding towards 7% ish on R&D spend as a percentage of 6 and we’re also going to. I think in the mix. The mix will also change slightly in the coming year because as I said 40 to 50 filings with respiratory with first to file and certain number of peptides etc. So hard to put a metric on per filing because the nature of that filing changes a little bit. But our endeavor is to go after complex opportunities which keeps the business sustainable.
And NPV per project has to be higher. That’s the internal criteria.
Tushar Manudhane
Got it sir. And secondly, the albitral market share has sort of reduced quarter quarter while the number had was at 19.5 and it moved up to 22 and we are now back to 19.5. Anything to read through in that?
Achin Gupta
No, I think it’s hardly a reduction that you see out there of 0.4% or so that we’ve seen. So I think 19 to 20 or rather 19 and a half to 20 is something that you should pencil and we are ranked 1 out there. And if supply was. If you could supply more then we could, you know there’s a potential to increase the share as well.
Tushar Manudhane
And just to complete on that the R and D part is this indoor site regulatory issue also one of the reason for. Let’s say is it delaying filing because of the regulatory issue at indoor site or the indoor site classification has got nothing to do with the filing of the assets?
Achin Gupta
No. So now we have de risk out of indoor. So our assets are fired from us. And one of the assets we are doing from goa because GOA is here.
Tushar Manudhane
No, I was referring to let’s say prospective filing. Not the ones which are already. Let’s say where we do R and D spend where the product probably from a validation or exhibit batches are ready. But because of classification at indoor site the acceptance of filing by us FDA is there. Is there that kind of a delay also happening
Achin Gupta
Same likewise for potential filings. Also we are focusing more on GOA and US side. Yeah. And Indore I think we will accelerate as and when as soon as it clears. Yeah,
Tushar Manudhane
Got it sir. And just lastly on Ventolin. This product will see a gradual pickup in terms of market share. Like what’s your strategy? If you could highlight given while you have exclusivity. But will the pickup be gradual enough or we can have a sizable business in say 2 to 3 quarters timeline.
Achin Gupta
Yeah. So you will see towards second half a wrap up happening in generic Quintelling though we will launch it within the quarter one and quarter one. Yeah but the wrap up will happen in half two
Tushar Manudhane
And capacity won’t be the constraint for this product.
Achin Gupta
We have US facility for it
Tushar Manudhane
From the device combination as well. Perspective
Achin Gupta
From which. Sorry, come again
Tushar Manudhane
From the drug device while drug would be there.
Achin Gupta
Not a problem at all on the devices side.
Tushar Manudhane
Got it. Thanks. Thanks a lot.
Achin Gupta
Thanks a lot.
Tushar Manudhane
Thanks. Thanks a lot.
Operator
Thank you. The next question comes from the line of Damianti Kirai with hsbc. Please go ahead.
Damayanti Kerai
Hi, thank you for the opportunity. My question is again on your US exit guidance of 1 billion in FY27. So you indicated couple of interesting products in respiratory peptides etc which can help you to achieve this rate. So Mike, two questions there. What kind of visibility you have on these products which gives you confidence that you can receive approval in this year. And second is for some of the bigger assets, what kind of risk mitigation strategies which you have already implemented. So if you can elaborate on these two points.
Thank you.
Achin Gupta
No, so see I think it’s in terms of confidence in each of these assets. We are seeing some developments happening like for example in adware. Now you’ve had a PAI that has happened. Okay. Ventolin where we were expecting around the same time we’ve got the approval in certain other assets also there is an ongoing, you know, discussion readiness that is there. Of course we can’t anticipate when the approval will come through. But in some of them we are aware of the goal date, et cetera. That’s well for quarter three, quarter four, you know wrap up to happen to a billion dollar kind of a run rate and that’s what we have envisaged in our business plan.
And from facility point of view all these facilities are also de risk. So from internally it’s only pending approval. From internally we are ready to kind of launch these assets as soon as the approval comes.
Damayanti Kerai
So when you say facilities issue that deal is. So most of these filings are filed from two sites say one from India and one from us. Is that the case?
Achin Gupta
No, that won’t be the case right now. These, these are filed from us or from goa. You will have one or two assets filed but and these are respiratories that I’m talking about. The peptide is with a partner site outside. So we don’t anticipate any. That’s why I’m suggesting that we don’t anticipate any risks in the facility. GOA has recently got inspected as well. There are two observations we are waiting. We have responded to those observations. We are waiting for the classification. Can’t comment on that.
But to nevertheless that’s the status of our facilities.
Damayanti Kerai
Sure. My second question is on your India business. So obviously fourth quarter I believe is very strong and full year you ended at 9% growth for the segment. So when we look ahead say 2728, do you think you can output face IPM growth in say next one or two years or it might take slightly longer because the market growth also improved in recent time. We are seeing around low double digit growth for market. So on that perspective you are just like close by but not outpacing the market as of now.
Achin Gupta
Yeah. So we are confident that we’ll be able to deliver a strong double digit growth as well as a market beating growth in FYI 2728. And we’ve been seeing that consistent trend over the last couple of quarters.
Damayanti Kerai
So. Okay, so you think it’s possible. Okay. And my last question is on your gross margin trends if qualitatively you can give some color given now your product pipeline is becoming more complex, generics heavy. So in that sense how should we look at your gross margins in senior term or in medium term?
Achin Gupta
Yeah, see it’s a large mixed bag in the gross margin so there are many factors that go into it. So like in the last quarter I had highlighted that we had you know, R and D cost, material cost going up due to which the gross margin had got impacted. So some bit of that has got reversed in this quarter where the margin is better because also you know, not just the product mix but also because the R and D material cost was lower in comparison to the previous quarter that you saw. I think the way I look at it is that of course lenalidomide was a high margin, but most of our renspy assets that are coming are mostly in house products.
So in house products will always give you a higher end of the margin, more than the company average that you’re seeing today. So it will only accrete your company gross margin. At the same time, you know, some of the peptides that we’re talking about in oligo, oligo is much later but peptides that we’re talking about, they are partnered products. So while the gross margin could be high out there, but there is also a profit share as a royalty that we end up paying which goes into gross to net. So therefore your gross margin, those products will be after the profit share which kind of brings it down.
But at the same time the SMD, etc. In the US at least is not much. So it is accretive significantly to your EBITDA margin. In India we are moving more and more towards chronic. So chronic will definitely come with 5 to 10% better gross margin and we are keeping a very tight control on how much what ilds we do. So keeping all these things in mind, I think gross margin should have a positive bias. And the last thing that I just want to highlight is that generally you will see in the results also there is a strong control that we have over cost.
So every year we take some target to actually reduce the cost such that it is lesser than the revenue growth that you see out there. So I think these are the things that we take care of. Of course there is this whole geopolitical and war risk that is there. We had some impact of that in quarter four. We have some impact in quarter one. Not significant though, but you know, some of these inventories that you’re buying today, as it gets consumed in second half, there may be some cost, but that’s temporary.
Like I think your question was more around longer term sustainability. Longer term I’ve talked about, but there may be some blips here and there because of the reason that I mentioned.
Damayanti Kerai
Thank you, thank you very much for your response. All the best.
Neha Manpuria
Thank you. Our next question comes from the line of Nikhil Mathur with HDFC mutual funds. Please go ahead.
Unidentified Participant
Yeah, hi, good afternoon. I’m sorry to be harping on the US guidance. One clarification. When you were saying that you will be at a billion dollar exit run rate, does it include land retired or it doesn’t include any contribution from Land retired
Achin Gupta
At the moment. We’ve left that out of this guidance. So that would be an upside to plan if you can successfully get back in the market before that.
Unidentified Participant
Okay, so if I analyze this quarter’s US revenue, you are at around $620 million. We are talking about a billion dollar exit. So this is about $380 million of incremental revenue. Just wanted to understand the skewness of this $380 million. So there are I think six, seven products that you’re launching this year. How what kind of contribution will be from one or two products in this incremental revenue? Will it be a skew towards one or two products or can there be an equitable distribution among six, seven products?
Because it’s, I’m just asking. It doesn’t create a big risk in FY28 because if competition comes in then again you kind of face a situation which you face in development this year.
Achin Gupta
So Nikhil, in terms of annualized revenues from these products, I think couple of them we are expecting 100 million plus annualized opportunities. And the other two are also significant. Right. So and then there’s a, so this is respiratory and then there’s a peptide acid which is also big. So we are expecting big contributions. I think the reason we’re not able to give a quarter wise kind of breakup or a product wise breakup is because the timing of launch, if it moves one or two months, that affects the full year number.
But run rate wise, assuming we have these launches, we will be able to cross that run rate by the end of the year. So there are you know, two, three big opportunities and couple of medium, medium sized opportunities.
Unidentified Participant
Got it. And what kind of a tail are we looking at in these plus hundred million opportunities? I mean can they continue for let’s say a couple of years, 28 and 29 or in 28 onwards only we can see some bit of erosion starting to happen.
Achin Gupta
So see these are not like the six month exclusivity kind of opportunities. So even if competition enters they will taper off slowly. So they are more like the way to look at it is what you saw on our albuterol or what you saw on our landry prior to supply disruption issues. These are most steady opportunities. So where we have to manage some level of price erosion but not a cliff kind of scenario. So these are steady opportunities and if there is a price erosion with new competition coming in, you may see some volume going up.
So you’ll have to manage it as a dollar value rather than looking at it as volume or a price gain.
Unidentified Participant
Understood. On the India business, can you quantify the contribution from your peak in 4Q? I imagine it’s only 4Q where your peak would have contributed, not in 3Q. Right.
Achin Gupta
Yeah, it wasn’t that large because real sales started happening in Jan. So Jan, Feb, March we’ve seen growth internally in secondaries. April also we saw an improvement over March on secondaries. But yeah, it’s not out of the 15% overall one India we reported, it’s not going to be a meaningful 10 days.
Unidentified Participant
Sub 1%, is that the sub one or sub 2%? Is that how we should read it?
Achin Gupta
I think those figures are broadly available in the market. If you look at iqv, I’ll give you a direction of how much primary we are doing.
Unidentified Participant
Okay. And is there any M and a component or in licensing component that I might have missed which is also leading to this double digit growth in 4Q?
Achin Gupta
Yes, we had in licensing of some Pfizer products, we had a small acquisition of a business called Inspera. Yeah, the base base will still be double digit. I think the presentation also we had mentioned, I think the four or last last time on. We’ve always announced these three, four ILDs and acquisitions that we have made.
Unidentified Participant
Okay, thank you so much.
Neha Manpuria
Thank you. Our next question comes from the line of Sayon Mukherjee with Nomura. Please go ahead.
Ashish Adukia
Yeah, hi, thanks for taking my question. Over the next let’s say two, three years, how should we think about, you know, your capital deployment? Both, let’s say organically or inorganically. If you can give any color the kind of assets and capabilities that you’re looking at.
Achin Gupta
Yeah, so look, I think we are preparing for a solid growth over the next, you know, five years and beyond. And for that I think the number one deployment is going to be on R and D side. So we have plans to accelerate RD pipeline. So respiratory assets, we have some under approval, more which we are filing complex products which we outlined was peptides, you know, other differentiated products. But also we’re going to step up on biosimilar side where we would want to do, you know, roughly 6 to 8 internally.
And if we find a couple of good opportunities, we can supplement through inorganic as well. So that will consume some capital. Then we have CapEx, which we have increased steadily over the last three years. So this cycle will probably reduce after another year or so because we built enough capacity for the products that we want to supply. And beyond that we will be led more by productivity initiatives. On top of that inorganic we are Interested in looking at assets? We evaluate several assets. Our bias is more towards differentiated specialty kind of products for developed markets, which is US and Europe, which give us a more sustainable growth and some capabilities as well.
So I think those are the areas where we would want to deploy capital in order to sustain the entire trajectory over a longer period of time.
Ashish Adukia
Yeah. Anything in India or emerging markets, like more in branded generic space you think CIPLA would be looking at or this would be largely organically built.
Achin Gupta
So India, we actually put a slide in the investor deck on the partnerships we’ve done. Acquisition. A large acquisition in India is little difficult for us because we are a number two, number three player. We are number one by volume. So whenever we start looking at some of these, there is a significant overlap that we have to account for. So emerging market remains a very good opportunity for us. We are looking at that. And if we find opportunities where we get business plus capabilities, that would excite us a little bit more because then that gives us a platform for future growth as well.
Ashish Adukia
Right. Actually, just one clarification. Because of cash on balance sheet is pretty large now and the kind of expansion organically and inorganic opportunity, it appears that, you know, it won’t get consumed. So I mean, are we then thinking about high dividend payout? What are your thoughts on the cash that you have on your books now?
Achin Gupta
See, there are opportunities to deploy. We need to be selective. You know, when we look at it as, you know, in absolute rupee dump, it looks high. But if you were to chase one or two large transactions, meaningful transactions, this is not a very high amount of cash. So I don’t think we are worried about the cash on our books. It gives us flexibility and it gives us opportunities to look at options which can help the future growth of the organization. At the same time, we do remain selective because, you know, the kind of opportunities that we are looking at, you know, have to really pass all of our filters in terms of, you know, diligence and adding strategic value.
Ashish Adukia
Right. Thanks. And all the best. Thank you.
Neha Manpuria
Thank you. The next question comes from the line of Neha Manpuria with Bank of America. Please go ahead.
Unidentified Participant
Yes, thanks for taking my question. A quick question on the India business. I think you mentioned we grew double digit in the trade generic business and I see we are growing double digit in consumer healthcare as well in FY26. So is it fair that the branded generic business has actually been pretty muted for the entire year? Therefore, what gives us confidence that we’ll be able to beat India growth in the next year.
Achin Gupta
Yes. So I think, you know, we mentioned that all the three segments of the business have done really well in especially Q3 and Q4. Q1 we had a muted quarter on the branded RX business, but that is behind us now. Right. There were reasons related to seasonality, etc. But we’ve not seen those similar reasons as we started this particular financial year. So with the products we have and the strategies that are there, we are, we are quite confident and we’ve seen that trend now over at least 2/4 which gives us confidence that this will continue.
And also we should still acknowledge that a Q is a fair representation in our mix in comparison to other players and market. Okay. So and that is season dependent and last couple of years we’ve had challenging seasons so we have to work much harder in other part of the portfolio to achieve that growth which at least we’ve been able to do in the second half of the year.
Unidentified Participant
So in that case, given that we’ve had a fairly low base on seasonality, ideally even a normal season should give you that tailwind for India growth this year. Right. That would be a fair assumption. Even if we didn’t have like even a normal season should help.
Achin Gupta
Yeah. So that’s why we’re saying, you know, we are confident about a double digit growth because these seasonal patterns, you know, don’t happen too many years in a row. Right. So I think the base was low for last year on some of these acute, but also the chronic portion, particularly diabetes cardiology, has grown significantly. So we have also diversified beyond that seasonality dependent portfolio. So yes, we will overcome this.
Unidentified Participant
Okay. And my second question is on the margin guidance that we mentioned, 18 and a half to 20, given that a lot of the US growth will be the high value launches would be second half weighted, is it fair to assume that in the second half our margins could be north of the 20% range and therefore the average that you’ve given, would that be a fair assumption?
Achin Gupta
Yeah, so that’s exactly what I had mentioned initially, that in 18 and a half to 20, 20% that we’re guiding, it will be more in the favor of H2 where you’ll have better than average and first two quarters where we don’t have the benefit of new launches, we will see a lower margin than the average that we’re giving. So yeah, that’s the trend that you will see.
Neha Manpuria
Thank you. We take our last question for today from the lion of Vivek Agrawal from Citigroup. Please go ahead.
Vivek Agrawal
Yeah, thanks for the opportunity. I’m just again trying to understand your EBITDA margin guidance. Given the outlook you provided for the US business. $1 billion plus run rate and India double digits double digit growth in FY27, this 18.5 to 20% appear a bit conservative. Just trying to understand have you baked in significant impact of let’s say input cost increase or impact of geopolitical situation etc. Or anything that is holding you back from giving a better guidance. Thank you.
Achin Gupta
See, I think you know we have made a lot of investment in the last one or two years. Years both on people as well as on R and D. Okay. And both these cost is going to sustain people cost will continue to be high because you’ve made manufacturing facilities and to add fields etc. I think more or less that investment phase is coming to an end. But of course that people cost is now sitting with us and revenue of that will start coming in like Achin had said later with the new launches coming in R and D also while it is discretionary, but still will continue to be at about 6 to 7% but more biased towards 7% because we are increasing the number of programs etc.
So therefore I think, you know, 18.5 to 20 is a fair margin to assume, you know, we are baking in more moderate kind of war risk and we are hoping that it’s temporary and not really going to sustain. If it sustains then of course you know, this margin will still try to mitigate through other measures. But nevertheless we’re not very long term kind of a sustained impact of that.
Vivek Agrawal
Understood. And given that you are suggesting 2H margins to be better than 1H and it will affect new launches in the U.S. Is it fair to understand that 28 margins or F28 margins can be materially different or better than F27?
Achin Gupta
I think that would be our target. Right. So we will obviously work towards continue to improve our targeted margin. You know, to be fair, I think it should. 20 plus is something that we should anyway sustain going forward.
Vivek Agrawal
Last question on one product. Nentata nev. So how material this product can be? So is it a very short term opportunity for two, three months or it can last throughout this year? You can help us understand. Thank you.
Achin Gupta
It’s not a very large product but we’ve got good market share so it’s doing well for us. We’ve had a few other launches as well already in the year, but these are not, I would not call them out separately. They’re not of that magnitude.
Neha Manpuria
Thank you ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Ms. Diksha Maheshwari for closing comments.
Diksha Maheshwari
Thank you everyone for joining in. If you have any further questions, please Write it to investor.relationsreatsipla.com thank you.
Neha Manpuria
Thank you. On behalf of Cipla Limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.