Cipla shares tanks 5% after temporary halt of key drug production; check fresh targets

Shares of Cipla Ltd tumbled nearly 5 per cent during the trading session on Friday after the pharma company announced that manufacturing of the drug Lanreotide is being temporarily stopped to support the USFDA remediation at the facility which produces the said drug.

To recall, Lanreotide is one of Cipla's top three products in the US market. The US market contributed to 27 per cent of Cipla's topline in financial year 2024-25, registering record sales of $934 million during the previous year. US sales for Cipla stood at $233 million for the September 2025 quarter.

The USFDA inspected Pharmathen's Rodopi facility in Greece in November 2025, which resulted in nine observations. Pharmathen is a contract manufacturer (CDMO) and is the exclusive supplier of the Lanreotide to Cipla. The company said that the re-supply of Lanreotide is expected to resume in the first half of FY27.

Shares of Cipla dropped 4.70 per cent to Rs 1,367.20 on NSE, against its previous close at Rs 1,434.50 on Wednesday. The total market capitalization of the company stood close to Rs 1.1 lakh crore. The stock has tumbled more than 18 per cent from its 52-week high at Rs 1,673, hit nearly 3 months ago.

Overseas brokerage firm Morgan Stanley has trimmed its price target on Cipla to Rs 1,292 and also cut its earnings growth estimate by 2 per cent for fiscal year 2025-26 and 1 per cent for year 2026-27. It said that any prolonged disruption in supply will lead to market share loss and downside risk to earnings estimates.

The global brokerage warned that the phase-out of gRevlimid and supply disruptions in Lanreotide are likely to weigh on performance, particularly in Q4 FY26. Any prolonged disruption could result in market share loss and downside risk, it said.

Domestic brokerage firm Nuvama Institutional Equities downgraded the stock to 'reduce' from 'hold' earlier. This affects Lanreotide supplies for Cipla in the near term and brings uncertainty for FY27E, which is a negative development for Cipla. It believes Cipla generates $150 million revenue from Lanreotide, which is now uncertain until issues are resolved.

"We note the recent approval for Lannett’s gAdvair brings more competition to Cipla’s proposed gAdvair. This along with expiry of gRevlimid exclusivity and the Lanreotide challenge pose an earnings challenge for Cipla in FY27E. We are cutting FY27E EPS by 11 per cent," it a revised target price of Rs 1,360 from Rs 1,715 earlier.

However, not all brokerages are bearish. Nomura believes the potential loss of Lanreotide sales has largely been priced in, noting its 6 per cent fall in this month, since the issue first came to light. Nomura has maintained a 'buy' rating with a target price of Rs 1,770 on Cipla.

Cipla is the third-largest player in the Indian Pharmaceutical Market (IPM). It enjoys leadership in the respiratory segment and continues to do well in domestic formulations. CIPLA's 'One-India' domestic franchisee is on course to deliver sustainable revenue growth, led by deepening penetration of sales channels and aggressive growth in big brands, said BNP Paribas.

"It faces challenges as regulatory issues have delayed the approval of key products such as gAdvair and gAbraxane in the past, we believe the worst is behind them, and we expect a sustainable revenue stream in the US driven by gAdvair, gAbraxane and gSymbicort. We have a Neutral rating despite the improving US pipeline," it added with 'neutral' rating and a target price of Rs 1,690.