Laurus Labs Targets 55-60% Gross Margin In FY26 On CDMO Expansion
The CDMO segment will account for 50% of the company’s revenue in the medium to long term.
Laurus Labs is targeting gross margins of 55% to 60% in FY26, led by an increase in revenue generated from the Contract Development and Manufacturing Organisation (CDMO) business. Speaking to NDTV Profit on Monday, the leading pharma company’s founder and CEO, Dr Satyanarayana Chava, expressed confidence over achieving higher gross margins in the current fiscal.
“The previous gross margin guidance was between 50% and 55%. Because of an increase in share from CDMO, now we are confident to achieve a gross margin between 55% and 60%,” he said during a conversation with NDTV Profit.
In Q1FY26, the CDMO segment registered a revenue of Rs 522 crore, marking a 103% year-on-year (YoY) rise from Rs 257 crore in Q1FY25. Total revenue stood at Rs 1,570 crore in Q1FY26, with generics contributing Rs 1,048 crore.
“Close to one-third of revenue came from CDMO and two-thirds came from generics. That means we are running an efficient operation even in the generic space,” the top executive said.
He projected that the CDMO segment could contribute nearly 50% of the company’s revenue in the medium to long term.
“In the next three to four years, we expect CDMO revenues should grow and we should inch towards 50% revenue contribution coming from CDMO in the medium to long term,” Chava added.
Highlighting the trajectory of the growth of CDMO revenue, he said the business vertical has grown from Rs 500 crore in FY21 to Rs 500 crore per quarter currently.
When asked about the potential for listing the CDMO business separately, Dr Chava firmly dismissed the idea.
Beyond the CDMO success, Laurus Labs is also making significant strides in innovation through its subsidiary, Laurus Bio, the company’s biosciences division.
Dr Chava revealed a three-pronged strategy focusing on precision fermentation, cell and gene therapy, and antibody drug conjugates (ADCs).
“If you look at these three, the bigger one, which is going to mature faster, is our precision fermentation, where we're investing a significant amount of money and resources.”
On the capital expenditure front, Laurus Labs has committed to a significant investment of Rs 5,630 crore in Andhra Pradesh over the next five to six years. It is expected to generate employment for 6,350 people in a phased manner.
Dr Chava noted that the company has been investing between Rs 800-1,200 crore annually over the last three to four years.
Shares of Laurus Labs were trading 6.64% higher at Rs 893.4 apiece on the NSE at 2:46 p.m., while the benchmark Nifty50 stood at 24,695.25, down 0.57%.
