There could be tough times ahead for Cipla, with Morgan Stanley expecting the pharmaceutical giant to report weak fourth quarter earnings for the financial year ending March 2026. The brokerage firm has also cut the target price for the counter, citing the recent Lanreotide supply disruptions.
Keeping that in mind, Morgan Stanley has maintained an 'underweight' rating on Cipla, while cutting the target price from Rs 1,396 to Rs 1,292. The brokerage firm has also trimmed earnings estimates by 2% for FY26 and 1% for FY27.
Cipla's Lanreotide Disruption
Cipla on Wednesday confirmed through an exchange filing that the firm's Lanreotide partner in Greece, Pharmathen, received a Form 483 notice at its Radopi unit.
Lanreotide is a synthetic drug, a somatostatin analogue, used to treat conditions caused by the body producing too many hormones. A Form 483, meanwhile, is a notice issued by the U.S. Food and Drug Administration (FDA) to company management at the end of an inspection, listing observations of conditions that may violate the Federal food regulations.
There were a total of nine observations noted, including microbiological contamination (Gram-negative bacteria), poor aseptic practices, high particulate reject limits & rejected batches, inadequate OOS investigations, as well as concerns over data integrity.
Impact On Cipla
Impact of the Form 483 on Pharmathen may have a serious impact on Cipla, as Lanreotide is the company's biggest US drug, with the company having a 22% market share. If Pharmathen faces problems, Cipla's Lanreotide sales could be affected. Manufacturing issues could affect Cipla's Lanreotide revenue.
In its latest note, Morgan Stanley has stated that Lanreotide supply disruption will be another key headwind for Cipla, which has already witnessed Revlimid phase-out. These two factors could culminate in Cipla posting a weak Q4FY26, according to Mrogan Stanley. As a result, the firm has cut the target price on the counter.
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