From the current standpoint, the company is developing a portfolio of revenue drivers to resume earnings growth that could stall in the short term. But with long gestation periods for earnings to flow through, we recommend investors hold the stock, trading at 20.5 times one-year forward earnings, which is in line with the last five-year average.
US portfolio
Zydus derived 41 per cent of Q3FY26 revenues from the US, its main segment. India, Emerging market, Consumer Wellness accounted for 25 per cent, 12 per cent and 14 per cent respectively and the recently-consolidated medtech accounted for 5 per cent.
Of the $1.4-billion revenue from the US in the last one year, Mesalamine, Lenalidomide and Mirabegron may have accounted for 25-35 per cent of revenues. Two of the three (Mesalamine, and Lenalidomide) have lost low-competition environment and are facing high generic competition. This implies negligible revenues for Zydus from FY27 from the two. For Mirabegron, Zydus, in February 2026, had announced a settlement with Astellas Pharma (innovator), wherein the company can continue selling Mirabegron for an upfront fee of $120 million and a licencing fee (undisclosed) to the innovator. This is for sales till September 2027, after which generics entry and revenue loss for Zydus is expected. Despite the loss from the two, Zydus should sustain low single-digit growth in the US portfolio owing to the settlement and its other avenues.
Two innovative medicine launches, limited competition launches under 505(b)(2)) pathway, and biosimilars are the strong long-term revenue drivers for Zydus along with a base portfolio that includes four-five first-to-file products as well.
In August 2025, Zydus reported positive topline results from a Phase 2(b)/3 trial in the US for Saroglitazar Magnesium in patients with Primary Biliary Cholangitis (PBC), a rare disease. The company will file a new drug application (NDA), which should take 12-14 months for approval. Zydus should be the third entrant in the field with launches from Gilead (Livdelzi) and Ipsen (Iqirvo) in an addressable market of around $1 billion. If approved, this will be the second innovative medicine from Zydus for rare diseases along with Zycubo (Copper Histidinate) for treatment of Menkes disease, an ultra-rare disease with Zycubo being the only approved medicine by FDA.
The sales potential from the two, especially Saroglitazar, should be significant and the company will also invest in sales teams for the launch. The company is considering acquiring a speciality treatment in the same category (liver specialists) to leverage the selling costs. Zydus also has Usnoflast in Phase 2b in the US for application in ALS patients (Amyotrophic Lateral Sclerosis), a highly unmet need.
Zydus has also developed a portfolio of drugs that are targeting 505(b)(2) route for approval. These are drugs that differ from approved products – in dosing, route of administration or formulation. 505(b)(2) is a hybrid pathway that relies on the innovator’s approval – similar to a generic, but with enough changes that necessitates bridging studies and deliver an exclusivity period as a reward (three, five or seven years). The portfolio includes three approved products of Sitagliptin combinations for treating diabetes and is likely to generate around $50 million per year.
Three NDAs under the 505(b)(2) pathway are under review that address oncology care and should start strong revenue contributions from FY27-end or FY28. Zydus’ biosimilar portfolio in the US now includes two sizeable inlicenced products that the company will be commercialising on patent expiry in FY28 and beyond. The company has acquired a US-based biologics CDMO facility for ₹1,350 crore. The facility will manufacture two immune-oncology products in the next one year and could also be used for additional manufacturing of future biosimilars.
In the base portfolio, Zydus’ plan of 25 launches per year will also include four-five first-to-file products that will have an 180-day exclusivity. Prime amongst them is generic Ibrance with the 180-day exclusivity beginning in H1FY28.
India
The company reported strong growth of 10 per cent year on year in FY25 and 9MFY26 driven by its innovator portfolio and a 14-15 product strong biosimilar portfolio. The innovator portfolio reported 23 per cent growth in FY25, driven by Saroglitazar, which is now a ₹450-crore revenue product. The company should sustain similar growth as the product ramps up and is aided by generic Semaglutide launch in India. It is backward integrated for Sema launch and also has tied up with an additional API supplier for the first wave of launch.
Zydus also plans on becoming a leading vaccines manufacturer in India. It supplies MR (Measles and Rubella), rabies, typhoid and flu vaccines in India. A similar portfolio is under development for UNICEF/international markets as well.
Consumer health and Medtech
Zydus has acquired two entities in the last year in consumer health and medical technologies space. In consumer health, the company acquired the UK-based Comfort Click for ₹2,800 crore. The company is a digital consumer health platform operating in VMS segment (Vitamins, Minerals and Supplements) in the UK, Europe and expanding in the US. The consumer health segment reported 113 per cent growth in Q3FY26 on consolidating the acquisition. The target company has reported 60 per cent revenue CAGR in June 23-25 and is expected to sustain the high growth as it expands its operations.
Zydus also acquired the France-based Amplitude Surgicals for ₹3,000 crore — a company which specialises in lower limb orthopaedics. The segment reported revenues of ₹340 crore in Q3FY26 a first full month of consolidation. The company plans on expanding markets in Europe and India to leverage the investment. The segment also received European approval for ‘Andy’, a robotic surgical system which will now be launched.
Zydus plans a presence in orthopaedics, interventional cardiology and nephrology in the medical technology space. It has also in licensed stents and TAVI (Transcatheter Aortic Valve Implantation) in the cardiology space. It is setting up a facility to manufacture diaphragms used in dialysis in nephrology space.
The company has developed several initiatives to drive long-term growth. But the loss of revenues in the short term from the two products will weigh on the growth along with margin impact. As shown in the figure, the reported EBITDA margins benefited from the one-time opportunities, which should roll back to 23-24 per cent despite the new ventures. This limits earnings growth and underlines our hold call on the stock despite strong revenue levers.
Published on April 4, 2026