Multiple near-term challenges may hijack Cipla’s growth trajectory
Cipla projects a mid-FY26 launch for Advair, while the release of Abraxane is contingent on regulatory clearance of the company’s Goa facility. Respiratory drug Albuterol faces intensifying competition, while similar concerns loom over the blockbuster cancer drug Revlimid, whose patent is set to expire in 2026.
While pharma major Cipla’s better-than-expected numbers for the July-September quarter has impressed brokerages, the multiple near-term challenges that it faces has turned many on the Street cautious. These worries have also weighed on the stock as it tanked close to 5 percent in morning trade on October 30.
At 09.17 am, shares of Cipla were trading at Rs 1,406.65 on the NSE. It is worth noting that the stock also fell close to 2 percent on October 29, after it released its quarterly numbers.
On one hand Cipla faces supply challenges for its its tumor drug Lanreotide which is expected to keep sales lower in Q3 and on the other it struggles with further delays for two key launches due to regulatory challenges.
Regulatory challenges at Cipla’s Goa and Pithampur facilities have pushed back the anticipated launch of its respiratory drug Advair to mid-FY26, while the chemotherapy drug Abraxane is now expected by brokerages to debut around FY27. Other key drugs are also facing their own set of challenges. Respiratory drug Albuterol is facing increasing competition, and similar concerns are circulating around the blockbuster cancer drug Revlimid, with its patent slated to expire in 2026.
Taking notice of the high product concentration risk and near-term challenges in key products for Cipla, brokerage firm Nuvama Institutional Equities has slashed its price target for the stock `by 4 percent to Rs 1,593, while retaining its ‘hold’ call. Meanwhile, three key products—Lanreotide, Revlimid, and Albuterol—currently account for approximately 20 percent of Cipla’s projected FY26 EBITDA, according to Nuvama. Therefore, any challenges to these drugs pose a considerable risk to the company’s growth trajectory.
UBS Securities also shares similar views. The brokerage believes that Lanreotide’s shortage may impact Cipla’s near-term performance at the current juncture. UBS also slashed its price target for the stock by 5 percent to Rs 1,960, but chose to retain its ‘buy’ call on Cipla.
Moving on, Nomura believes the narrative for Cipla has worsened in the recent past, driven by US prospects and slowdown in India. “Supply constraints in Lanreotide, potential competition in Lanreotide in due course, a delay in clearance of the Goa site resulting in Cipla failing to have the first-mover advantage (a competitor has gained approval) presents potential risks to earnings,” Nomura wrote in a note. On account of this, Nomura also retained its ‘neutral’ call on the stock with a target price of Rs 1,568.
The brokerage also flagged that a potential delay hangs over Abraxane’s launch as it hinges on the Goa facility’s clearance. “Any setback in facility clearance poses a risk to estimates, and with limited catalysts, we maintain our underperform stance,” BoFA stated.
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