Gland Pharma US and Europe growth and CDMO pact strengthen earnings outlook

Investment View and Valuation

Motilal Oswal Financial Services Ltd. (MOFSL), in its August 10, 2026 results update, reiterated its BUY rating on Gland Pharma following a better-than-expected Q1 FY27 performance. The broker identifies robust growth in the US and Europe, a differentiated product-launch pipeline, currency tailwinds and a full-service CDMO agreement as the principal supports for the company’s growth outlook.

MOFSL raised its FY27E and FY28E earnings estimates by 3 per cent and 4 per cent, respectively. Its target price of Rs 3,080 is based on 30 times 12-month forward earnings. The valuation reflects expected growth from complex injectables, peptides, GLP-1 and liposomal technologies rather than conventional sterile manufacturing.

Q1 FY27 Financial Performance

EBITDA margin expansion was driven by a 245-basis-point reduction in staff costs and a 40-basis-point reduction in other expenses as a proportion of sales.

US Growth and Product Launch Momentum

The US remained the key growth engine, with sales increasing 32 per cent year on year to Rs 9.8 billion, representing 54 per cent of revenue. US CDMO revenue grew 48 per cent to Rs 2.6 billion, supported by the launches of Dalbavancin and Multi-VMN.

The US B2B business grew 27 per cent to Rs 7.1 billion, driven by volume expansion in Enoxaparin, Vancomycin, Chlorothiazide and Heparin. Gland Pharma launched four molecules in the US during Q1 FY27, filed three ANDAs and received seven approvals. This took cumulative US filings to 389, of which 342 had been approved.

European Business Strengthens

European sales grew 20 per cent year on year to Rs 3.9 billion, accounting for 22 per cent of sales. Growth was supported by higher volumes of products including Daptomycin, Cenexi CDMO products and Dalbavancin.

MOFSL notes that differentiated products, customer additions and commercial execution are strengthening the European business. Gland Pharma has licensed multiple products from partners across European countries and remains in discussions with additional customers.

Cenexi’s manufacturing, warehousing, packaging and final-release capabilities provide an end-to-end customer offering for relevant European products.

Other Markets and Operating Commentary

Performance in other markets was comparatively weaker. India sales rose 12 per cent year on year to Rs 666 million, while ROW sales increased only 2 per cent to Rs 3.0 billion. Other core markets declined 28 per cent to Rs 534 million.

Management said lower offtake for certain products muted performance in these markets. ROW was affected by tender delays, although management indicated that demand remained healthy in several key markets. Supply disruptions in Saudi Arabia were identified as a constraint.

Growth Guidance and Capacity Expansion

Management guided for FY27 constant-currency revenue growth of 15–16 per cent and aspires to deliver a 20 per cent CAGR from FY28 over the following four years. The base business excluding Cenexi grew 24 per cent year on year, with approximately 5 per cent revenue growth attributable to favourable currency movements.

Cenexi reported Q1 FY27 revenue of EUR48 million and EBITDA of EUR2 million. Management reiterated FY27 guidance of approximately EUR200 million in revenue and a high-single-digit EBITDA margin.

Gland Pharma plans Rs 5.5 billion of FY27 capex, including an oncology isolated line, a pre-filled syringe line and an ophthalmology line at Pashamylaram. A new high-capacity ampoule line at Fontenay is expected in early 2027 and should add around 30 million units of annual capacity.

Strategic CDMO Agreement

The strategic manufacturing agreement with a global pharmaceutical company is expected to begin technology transfer from September 2026. The initial product basket will be transferred over 24 months.

• Around 60 per cent of the products are focused on the US.
• Approximately 30–35 per cent are focused on Europe.
• The balance is directed towards ROW markets.

Earnings Outlook and Key Technologies

MOFSL expects a FY26–FY28 sales CAGR of 14 per cent, EBITDA margin expansion of 260 basis points and an EPS CAGR of 21 per cent. Management sees the GLP-1 opportunity becoming meaningful from FY30 onwards in the US and Europe.

The broker’s positive outlook is based on expected growth from complex injectables, peptides, GLP-1 and liposomal technologies, alongside the company’s differentiated product pipeline, European expansion and full-service CDMO capabilities.