Make one important approval of the medicine Cipla shares attractive in the midst of tariff concern?

Copyright © HT Digital Streams Limit all rights reserved. Markets make US approval for key cancer medicine Cipla shares an attractive buy amid tariff problems? Dipti Sharma 4 min Read 17 Apr 2025, 12:05 AM IST CIPLAs said last week that it received US regulatory approval for its generic version of cancer medicine Abraxane. Summary With Trump’s rates on track, is it really the suitable time to upload on pharmaceutical supplies? And where does Cipla stand in all this? Cipla’s shares have risen 6% since he said he received final approval from the US Food and Drug Administration last week for his generic version of Bristol Myers Squibb’s Abraxane, a cancer medicine. Does the approval to sell the long -awaited product in the US Cipla a compelling buy, especially if Trump’s rates threaten the horizon? “One approval of the product in itself does not make a business more attractive,” says Prashant Nair, chief analyst for pharmaceutical and healthcare at Ambit Capital. “The approval of earlier than expected for Abraxan is positive, but rates will have an impact on Cipla.” Nair has the extent of the impact of rates depends on the quantum of the levy, the company’s efforts to set up the supplies of its US plant, and the ability to transfer the rate to customers, Nair noted. US President Donald Trump announced a 10% baseline rate on all imports on April 2 and a separate additional trading partner rates – 26% for India, although he interrupted the measures for 90 days. US trade secretary Howard Lutnick told ABC News on Sunday that pharmaceutical rates are also coming in the next month or two. Read also | Trump’s tariff eruption: Asian markets have rattled, India is doing better analysts that Cipla shares will even earn with the impending rates as a result of the earlier-and-expected approval for the cancer medicine and the lower dependence on US markets. According to one analyst, the rates can only affect Cipla’s earnings to a minor extent. Lower US Focus “Even at the 10% tariff of 10%, all generic players who have exposure to the US – Cipla included – will experience the impact,” said an analyst who requested anonymity. While Cipla’s US exposure is relatively lower than some peers, the company can still see a 3-4% earnings. For others, the damage can go deeper, the analyst said. Cipla, which makes a variety of medicines for respiratory, HIV and cancer, is actively aimed at the North American market with a pipeline of generic medicine launches. “In North America, our focus is to solve supply problems, maximize commercial execution and speed up the launches of our US facility,” said Ashish Adukia, Cipla CFO, about a earnings call with analysts. Nair prefers pharmaceutical businesses focused on India and less linked to the US market. “Cipla’s US exposure is about 30% of revenue,” he pointed out. Still, the company keeps quite well about its most important markets -India, North America and South Africa. In the US, delays in approving the product were a drag, but the green light for generic Abraxan is positive. In India, growth was slower than usual, but there are signs of recovery. As for South Africa, Cipla remains a market leader, Nair added. Read also | Indian pharmaceutical resort to home remedy, as the tariff Malady Looms Sumit Gupta, an analyst of the healthcare at Center, said that Cipla was relatively protected from the tariff hit, thanks to its lower part of the US market income compared to opponents with higher US income dependents -almost 46% for ZYDUS LIFESCETCETCES and 47% for Aurobindo Pharma. Execution and regulatory barriers are the most important disadvantage risks to Cipla, he said. “The recent approval of generic Abraxans can give Cipla a solid income fly – about $ 30/$ 50 million in FY26E/FY27E, which translates US sales growth of almost 5% annually,” he said. According to some analysts, the approval of the product was not a complete surprise. There were concerns about possible delays for approved inspection due to the production of quality issues at the company’s Goa plant, which could have driven the launch time line for the long-awaited cancer medicine. The plant received the lead of the US FDA in October 2024. With the green signal, “Cipla now expects to launch the product in 1hfy26 against the leadership of a launch in 2hfy26e,” Nomura said in a April 11 report. $ 50 million potential currently is three-four generic medicine businesses already in the market and total market size has shrunk, analysts pointed out. Cipla’s generic version of Abraxane is used to treat metastatic breast cancer, locally advanced or metastatic lung cancer that is not small cells, and metastatic adenocarcinoma of the pancreas, the company said on April 11. Nomura said Cipla could seize the market share of other businesses, although it first missed the lead. The foreign broker adopts a 65% pricinger erosion with the additional competition and a 20% market share for Cipla in FY27. Elara Securities (India) said despite the competition, Cipla still has “the potential to generate up to $ 50 million of the product annually.” The broker has already taken into account about $ 20 million in US revenue from generic Abraxane for FY26. Most importantly, the approval removes the risk of downgrading any further delays, Elara highlighted. Read also | Bitter pill for Indian pharmaceutical rates, as Trump tariffs can also impair the exports with $ 2.25 billion mutual funds, it also appears to remain. According to the Prime database, their shares of the company’s shares kept steady. The stock is currently trading about 24 times its price-to-earnings ratio, significantly lower than its five-year average of 30. Cipla shares have dropped 4.3% so far. The company is scheduled to announce its results on March 13. Prabhudas Lilladher expects a 9% sales growth in the March quarter, taking into account continued gains of generic Revlimid ($ 90 million in the fourth quarter of $ 70 million last year), ongoing supply problems with lanreotide (an impact on sales with about $ 20 million), and an 8% growing seasonal benefits. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Pharma #Cipla Mint Specials