Global brokerage firm Macquarie has maintained its ‘Outperform' rating on Zydus Lifesciences shares as it believes the company is positioning itself for a strategic shift towards higher-margin branded businesses, innovative therapies, MedTech and CDMO. The brokerage firm has Zydus Lifesciences share price target of Rs 1,285 apiece.
The rating action follows investor meetings with Managing Director Dr. Sharvil Patel. According to Macquarie, branded businesses, including innovative medicines, domestic, and international formulations and consumer health, contributed 55% of Zydus' revenue in the first quarter of FY27. Management expects this mix to exceed two-thirds of revenue over the medium term, supporting EBITDA margin expansion to 27-28% from around 24% currently.
Zydus' innovation portfolio is also emerging as a meaningful growth driver in the US. The innovative products contribute around 10% of the company's US revenue and remain highly profitable.
“Management expects Saroglitazar (FY28 launch) to generate peak sales of $250-300 million (bull case: $400 million), with FY27 margin guidance already reflecting most pre-launch US commercial investments,” Macquarie noted.
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Further, Zydus' expects to launch over 30 products annually in the US, which is expected to support growth in FY27-28.
In India, management expects Zydus to outperform the Indian pharmaceutical market by 300-500 basis points in FY27, supported by oncology, biosimilars, nephrology and Semaglutide. Zydus also benefits from supplying gSemaglutide to partners such as Torrent and Lupin.
Macquarie noted that the company's international formulations business remains a profitable growth engine, as it delivered ~20% CAGR over the past six years, with margins expanding from single digits to the high-teens. Management expects strong growth and margin improvement will continue in the business.
Further, the company's management also expects the consumer wellness business (58% owned by Zydus Life) to sustain double-digit growth, driven by low-teens growth in India.
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