ZYDUSLIFE Q3 2024-2025 Call Highlights: Profit Jump, Robust Margins & Expansion Plans!

Zydus Lifesciences Ltd., a leading Indian Pharmaceutical company, in its Q3 earnings call discussed strong performance across multiple segments, with US business expecting high single-digit growth in FY26 supported by 25-30 new product launches. The company’s product portfolio updates included CUTX-101, a lifelong treatment for Menkes disease, LiqMeds portfolio launches, and GLP1/Semaglutide where it has backward integration in API production. The company plans to deploy its INR4000 crore cash reserves for capacity expansion, US specialty acquisitions, and medical devices business development. Management highlighted that its emerging markets and biosimilars businesses are showing strong growth, with particular focus on India and developing markets.

Zydus Lifesciences demonstrated strong financial performance, with consolidated revenue growing 17% and net profit increasing approximately 29%. The US formulations business was the standout performer, contributing 47% of total revenue at $285 million and showing 31% year-on-year growth. The India business grew more modestly at 7%, with its chronic portfolio reaching 42.4% contribution, while the consumer wellness division achieved double-digit growth with a 4.8% volume increase. Operational performance improved with margins expanding to 26.3%. The company maintained a strong financial position with a negative net-debt-to-equity ratio and net cash of INR3,091.6 crore. Notable developments included the launch of five new products in the US market and FDA approval for Phase II(b) clinical trials of Usnoflast for ALS treatment.

Continue Reading: Discover the Vital Insights from Zydus Lifesciences Ltd.’s Earnings Call!

Financial/Operational Metrics:

• Total Revenue: INR5,326 crore, up 17% YoY.
• Net Profit: INR1,023 crore, up 29% YoY.
• EPS: INR10.17, up 30% YoY.
• EBITDA: INR1,387 crore, up 26% YoY.
• Total Expense: INR4,142 crore, up 14% YoY.

Outlook:

• US: Anticipates high single-digit growth for the US geography in FY26.
• Profitability: Expected to achieve over 23% EBITDA margin in one to two years.
• Capex: Higher capex planned for the next two years, focusing on capacities for complex dosage forms.

Analyst Crossfire:

• US Performance & Mirabegron Opportunity, Sitagliptin Franchise & CVS Deal (Suryanarayan Patra – PhillipCapital): There was no significant sequential decline in the US business, despite no sales of Lenalidomide this quarter. Mirabegron does not have abnormal inventory buildup, and its revenue potential remains strong. The Sitagliptin 505(b)(2) portfolio is a major success, with secured government contracts and a CVS deal. It has paved the way for future 505(b)(2) launches, though revenue specifics were not disclosed (Sharvil Patel – MD).

 

• Non-Recurring Expenses & Adjusted Margins, 505(b)(2) Portfolio Contribution (Neha Manpuria – HSBC): The quarter included INR95 crore in non-recurring expenses, including legal fees for acquisitions and INR17 crore in GST losses from inventory destruction. The Sitagliptin franchise is a key revenue driver, while other 505(b)(2) products contribute mainly through high-margin profit-sharing agreements. The portfolio is expected to expand with new licenses (Nitin Parekh – CFO, Sharvil Patel – MD).

 

• Gross Margin Decline & Sitagliptin Revenue Recognition (Anubhav Agarwal – Credit Suisse): The sequential decline in gross margin was due to the absence of Lenalidomide sales and lower Asacol HD sales. CVS inventory shipments have begun, but not all sales were booked in the quarter. Government sales continued as usual (Sharvil Patel – MD).

 

• Revlimid Sales Outlook & Foreign Exchange Gains (Bino – Analyst): Revenue from Lenalidomide is expected to be distributed throughout the year rather than concentrated in specific quarters. Even with price erosion, higher market share could help maintain revenue levels. INR182 crore in forex gains were realized due to a strengthening dollar. The company maintains an open, natural hedge with no foreign currency debt (Sharvil Patel – MD, Nitin Parekh – CFO).

 

• US Growth Outlook & New Launches, China & Emerging Market Expansion (Nitin Agarwal – Analyst): Despite a large Revlimid component in FY25, US business is expected to grow in high single digits in FY26, supported by 25-30 new launches. No immediate plans for China, but expansion into other emerging markets is underway (Sharvil Patel – MD).

 

• US Growth Outlook for FY26 & FY27, Biosimilars Expansion Strategy (Kunal Dhamesha – Macquarie, Nitin Agarwal – Motilal): FY26 is expected to see growth over FY25, while FY27 projections depend on exclusive product launches. Zydus is focused on India and emerging markets for biosimilars, participating in large market tenders, but has no immediate plans for developed markets (Sharvil Patel – MD).