Cipla shares are under pressure today, slipping over 3% in early trade, after Nuvama Institutional Equities downgraded the stock and cut its earnings estimates and target price. The brokerage’s latest report points to supply disruption in a key US drug, rising competitive pressure, and weaker earnings visibility over the next two years as the main reasons behind the cautious stance.
Nuvama downgraded Cipla to ‘Reduce’ from ‘Hold’ and cut its FY27 earnings per share estimate by 11%. Nuvama said the downgrade reflects fresh risks emerging in Cipla’s US business, especially around Lanreotide, along with increasing competition in gAdvair and the end of gRevlimid shared exclusivity, all of which are expected to weigh on earnings and margins.
Here is a look at the key concerns that Nuvama highlighted and possibly why Cipla stocks are down –
1. Lanreotide supply hit after manufacturing pause
Nuvama said Cipla’s European contract manufacturing partner, Pharmathen, has temporarily paused production at its Rodopi facility in Greece following a USFDA Form 483 that flagged cGMP compliance issues. According to the brokerage, the nature of the observations appears severe, particularly for a sterile injectable facility, and remediation could take longer than initially expected. Cipla has informed exchanges that re-supply of Lanreotide is likely only in the first half of FY27, subject to quality clearance. Until then, Lanreotide will remain in limited supply, creating uncertainty for near-term US revenues.
2. Sharp cut in Lanreotide revenue estimates
Lanreotide is among Cipla’s top three products in the US market and had been a high-margin contributor due to limited competition. Nuvama said it had earlier built in about $150 million of Lanreotide revenue for FY27 but has now cut this sharply because of the supply disruption and the risk of market share loss. The brokerage noted that Amneal is expecting to launch Lanreotide in early calendar year 2026, while Dr Reddy’s Laboratories and Sun Pharma have also filed DMFs. Nuvama warned that once Cipla re-enters the market, it may not fully recover its earlier share.
3. gAdvair market turning crowded before Cipla’s entry
Nuvama also pointed to rising competition in the US gAdvair market. Lannett and its partner Respirent received final approval in January 2026, adding another player to an already competitive space. The brokerage said the presence of multiple established generics could lead to price pressure and fragmented market share even before Cipla’s product receives final approval, which is expected by Q4 FY26. This reduces the earnings contribution Nuvama had earlier expected from gAdvair.
4. Pressure across other US products
Beyond Lanreotide and gAdvair, Nuvama highlighted weaker trends in other parts of Cipla’s US portfolio. The brokerage flagged a weak start for gAbraxane, where competitors have gained share faster, and warned of risk to Cipla’s albuterol inhaler business after Amneal received approval for its competing product. Taken together, these factors add to the pressure on Cipla’s US sales trajectory over the next few quarters.
5. Earnings cuts and margin cooling ahead
Given the combined impact of supply issues, competition, and the expiry of gRevlimid shared exclusivity, Nuvama cut its FY27 revenue and EBITDA estimates and lowered adjusted profit and EPS forecasts by about 11%. The brokerage said Cipla’s EBITDA margins are expected to move back towards the pre-gRevlimid range of 18–21%, compared with the higher levels seen earlier. Nuvama expects a largely flat earnings growth profile over FY26 to FY28 and has valued the stock at 22 times its 12-month forward earnings, leading to the ‘Reduce’ rating and lower target price.
Conclusion
Nuvama said Cipla is facing multiple headwinds at the same time, with Lanreotide supply uncertainty, heavier competition in key US products, and margin pressure coming into focus. The brokerage added that any delay in restarting manufacturing at Pharmathen’s Rodopi facility could further hurt volumes and profitability, keeping its outlook cautious on the stock at current levels.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.