Zydus-Sunshine JV to invest over USD 20 million in Sri Lanka drug plant

Zydus Sunshine Lifesciences (Pvt) Ltd, the proposed joint venture between Zydus Lifesciences Ltd and Sunshine Healthcare, has signed an agreement with the Board of Investment of Sri Lanka to establish a pharmaceutical manufacturing facility at Horana.

The agreement, signed on October 13, 2026, advances the joint venture plan announced by the two companies on June 26. The project entails a phased investment of more than USD 20 million and will be developed on a nearly four-acre site within the Horana BOI zone.

Commercial operations are expected to begin in 2028, subject to project execution timelines and regulatory clearances. In its first phase, the unit will manufacture oral solid dosage forms for the Sri Lankan market, a category that includes tablets and capsules.

The investment gives Zydus a local manufacturing base in Sri Lanka rather than relying entirely on imported products. That could help shorten supply chains for essential medicines and potentially improve availability during periods of Logistics disruption or import-related constraints. For Sri Lanka, the proposed facility would add domestic pharmaceutical production capacity in a market where medicine supply resilience has become an important policy consideration.

The expansion is consistent with Zydus’ broader push in international formulations. Its international markets formulations business, covering emerging markets and Europe, reported sales of Rs 3,070 crore in FY26, up 39.9 per cent from the previous year. The company had attributed the growth to broad-based demand in emerging markets and improving performance in Europe.

At the group level, Zydus reported consolidated revenue from operations of Rs 27,148.4 crore in FY26, an increase of 16.8 per cent year-on-year. Pharmaceuticals remain its principal business, while the company is also investing in consumer wellness, medical technology, biosimilars, vaccines and specialty medicines.

The Sri Lanka project is relatively focused compared with Zydus’ wider investment programme, but it fits the company’s stated strategy of widening its presence across international markets and building market-specific portfolios. Local production may also offer the joint venture a better platform to respond to demand for selected essential medicines than an import-led model.

Execution will remain the key factor. The facility is not expected to begin commercial production for around two years, and the timeline remains conditional on regulatory approvals and Construction progress. The announcement does not disclose the ownership split in the proposed joint venture, the product list beyond oral solid dosage forms, or the planned manufacturing capacity.

Zydus has been increasing capital deployment across its businesses. Its FY26 capital expenditure, including property, plant, equipment and intangible assets, stood at Rs 2,671.5 crore, while it also spent on acquisitions and capability expansion. Management has indicated that its current investment programme includes manufacturing capacity, formulations research, vaccines, biologics and specialty-product initiatives.

As of 12:25 pm on October 15, 2026, Zydus Lifesciences shares were trading at Rs 1,132.75, up 0.78 per cent from the previous close of Rs 1,124.00. The stock has gained 13.34 per cent over the past year, compared with a 5.86 per cent decline in the BSE 500, an outperformance of about 19.20 percentage points. It was also around 6.5 per cent below its 52-week high of Rs 1,212.00.

The immediate milestone for the Zydus-Sunshine venture will be converting the BOI agreement into construction and regulatory progress, ahead of the targeted 2028 start of commercial operations.

Disclaimer: The article is for informational purposes only and not investment advice.