Cipla shares: Nomura says 'Buy' pharma stock; target price set at Rs 1,780

Nomura India has reaffirmed its 'Buy' rating on Cipla Ltd with a target price of Rs 1,780 by March 2026. This valuation is based on 28.5 times Cipla's projected earnings per share of Rs 62.30 for FY27.

Cipla recently secured final approval from the US Food and Drug Administration (USFDA) for its Abbreviated New Drug Application (ANDA) for gAbraxane. The approval pertains to the Goa site, which was cleared by the USFDA in October 2024. Nomura noted that while the approval was anticipated, the delay had raised concerns of a potential pre-approval inspection.

"We think the approval thus presents visibility on launch. Cipla now expects to launch the product in 1HFY26 vs its guidance of a launch in 2HFY26E. We understand, it may take some time to ramp up production and commence supplies. Therefore, we think the launch is likely towards the end of 1HFY26F," Nomura stated.

With Sandoz and Cipla both having received approvals, Nomura anticipates more generic approvals for gAbraxane. It highlighted an increase in ANDA filing activities, with companies including Hengrui, Viatris, and Hainan Shuangcheng filing applications in 2022-2023, which could be approved by 2025.

Nomura currently factors in $18 million and $56 million in revenues from gAbraxane for FY26 and FY27 respectively. "We have currently factored in $18mn/56mn revenue from gAbraxane in FY26F/27F into our estimates. We had assumed a delayed launch in FY26. There could now be some upside to our estimates, in case the company launches the product in 1HFY26. However, we see limited upside to our FY27F estimates," it said.

Sandoz, which launched gAbraxane in October 2024, had captured a 39 per cent market share by February 2025. The innovator brand recorded USD541 million in sales in 2024. Despite the delay in Cipla's launch, Nomura believes the company can still capture a significant market share from existing brands.

Nomura assumes a 65 per cent price erosion and a 20 per cent market share for Cipla's gAbraxane by FY27, given the increased competition. Despite not having the first-mover advantage, Cipla is expected to leverage the market dynamics effectively.