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Building for FY28 and beyond

Zydus Lifesciences’ FY25 annual report highlights strong R&D momentum, particularly in novel and specialty drugs, with Saroglitazar trials in PBC and MASH progressing well—key data is expected by end-2025. Several other novel assets are also advancing in the pipeline, targeting both the U.S. and emerging markets. In the U.S. generics segment, which remains the company’s largest market, Zydus retained its 5th position by prescriptions and launched 17 new products during the year. The company is also expanding into the MedTech space, having acquired a cardiology-focused facility in Surat, initiated construction of a new dialysis membrane plant, and announced a €256.8 mn acquisition of Amplitude Surgical in France. Additionally, Zydus is making significant progress in biosimilars and vaccine segments. On the financial front, it reported a net cash position of ~INR 49 bn, generated FCF of INR 56 bn, and maintained a dividend payout ratio of 24.5%, reflecting a strong financial position. The annual report underscores Zydus’s ongoing efforts to build multiple revenue streams and transition from a generics-focused company to a diversified, innovation-driven healthcare player. However, the financial impact of these initiatives is expected to materialize meaningfully from FY28 onwards, while FY27 may see negative earnings growth due to a decline in sales of gRevlimid and other key products. Hence, we maintain a ‘Hold’ rating at present.

* R&D / Innovation at the forefront: The company has made strong progress in liver diseases (MAFLD, MASH, PBC), neurological disorders, and rare conditions. The development of Saroglitazar for PBC and MASH has reached important milestones—In PBC, Patient enrolment is complete for the Phase II(b)/III trial. Data monitoring and patient follow-up are currently underway, with a comprehensive data readout expected by the end of 2025. Patient recruitment for the Phase II(b) clinical trials for MASH has also been successfully completed. Data monitoring and patient follow-up activities are underway. Phase II(a) trials for PCOS and MAFLD have been completed. Usnoflast, designed to treat CAPS, is advancing through Phase II(b) trials in the U.S. and has earned both Orphan Drug and Fast Track designations from the FDA. CUTX 101, aimed at Menkes disease, is awaiting FDA approval and could address a condition with no current treatment. Early trials (Phase II(a)) for PCOS and MAFLD have also been completed, and research efforts are expanding into ALS, Parkinson’s, sickle cell disease, and ulcerative colitis.

* Specialty, Rare Disease & Biologics: In the specialty and rare disease area, the company has struck a licensing deal with Synthon for a novel oncology drug, with an NDA expected in 2026. It has also acquired three important rare disease treatments: NULIBRY™, Zokinvy®, and CUTX 101. A huge pipeline of 207 products is currently under development in the U.S., targeting a market estimated at USD 170bn. The company has already launched eight specialty liquid-oral drugs in the U.S. through the 505(b)(2) pathway, with three more awaiting FDA approval.

* Ranks 5th in US Generic Rx: The company launched 17 generics in the U.S. last year, including two first-to-file products. It filed 27 ANDAs and received 24 approvals (including five tentative ones), bringing its total U.S. product portfolio to over 225. It holds market leadership in 25% of product families and ranks among the top three in 55%. According to IQVIA, it ranks fifth in the U.S. based on prescription volume as of March 2025.

* Biosimilars & Vaccines portfolio beefing up: Zydus has 32 molecules in bio similars and novel biologics space. 14 of these products have already been launched in India and other emerging markets. On the vaccine front, the company has 17 approved vaccines— including for flu, rabies, measles, and Hepatitis B. Additional vaccines in development include those for Hepatitis A, Hepatitis E, MMRV, and a bivalent typhoid–paratyphoid vaccine

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