Pharma Q2 Outlook: Pricing pressure, US competition to weigh on select players

ET Intelligence Group: India's leading pharmaceutical companies are expected to report a mixed performance in the September quarter, with growth largely driven by domestic formulations, specialty products, and emerging markets.

On the other hand, pricing pressure, generic competition, elevated raw material costs and a high base in the US business are likely to weigh on some players. Sun Pharmaceutical Industries, Aurobindo Pharma, Torrent Pharmaceuticals and Divi's Laboratories are expected to be among the stronger performers whereas Dr Reddy's Laboratories, Lupin and Cipla may be under pressure due to the absence of high-margin opportunities seen in the previous year and increased competition in key products.

Sun Pharma is expected to deliver high-single-digit revenue growth, driven by India, emerging markets and continued traction in specialty products such as Leqselvi, Unloxcyt, and Winlevi. Global specialty sales, emerging markets and domestic sales are likely to increase in double digits.


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The operating profit before depreciation and amortisation (EBITDA) is expected to rise in mid-single digits, although margins may soften slightly due to higher research and development (R&D) spending and raw material costs. Key monitorables include the ramp-up of Leqselvi and Unloxcyt and trends in the US business, where growth is expected to remain subdued. Aurobindo Pharma's revenue growth is expected to be led by the Lannett acquisition, strong performance in Europe, and a stable US business. EBITDA is likely to rise in the strong double digits, with margins remaining stable.

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Key monitorables include Lannett integration and the scale-up of the 6-APA/Pen-G facility. Dr Reddy's revenue is expected to remain flat as weakness in the North America business, including lower Revlimid contribution and semaglutide supply constraints in Canada, offsets growth in other markets.

EBITDA is likely to decline with margins contracting due to a weaker product mix. Key monitorables include semaglutide supply restoration and the resolution of USFDA observations.

Lupin's revenue is expected to grow in high single digits, supported by strong performance in India and other non-US markets, and the Visufarma acquisition. However, US sales are likely to decline due to competition in Mirabegron & Tolvaptan.

Cipla's revenue is expected to remain flattish despite strong double-digit growth in India, as the US business faces a high base from Revlimid and One Africa revenues remain weak due to the loss of a South Africa tender.

Torrent Pharma's revenue growth likely to be the strongest among its peers following the consolidation of JB Pharma, while the core business continues to deliver healthy growth across India and the US.

Divi's Laboratories' revenue is expected to be driven by strong traction in the custom synthesis business & healthy growth in nutraceuticals, and continued scale-up of iodine-based contrast media products. Key monitorables include inventory trends, geopolitical developments and sustained demand in the custom synthesis business.