Alembic Pharmaceuticals: Q2 FY26 Sees Broad-Based Growth and Strategic US Foray

Alembic Pharmaceuticals Limited has reported a strong performance for the second quarter of fiscal year 2026, demonstrating robust growth across its key business segments. The company's total revenue surged by 16% year-on-year, reaching INR 1,910 crore. This impressive top-line expansion was complemented by a significant improvement in profitability, with EBITDA before R&D expenses growing by 32% year-on-year to INR 503 crore. This pushed the EBITDA margin to 26%, up from 23% in the previous year, reflecting enhanced operating leverage and improved capacity utilization across its facilities. The profit before tax, excluding exceptional items, also saw a substantial increase of 34% year-on-year, amounting to INR 225 crore.

The growth was notably broad-based, with contributions from all major divisions. The India Branded Business recorded a 5% year-on-year growth, driven by accelerated performance in Gynecology, Ophthalmology, and Animal Health segments. The US Generics business was a standout, achieving a 21% year-on-year increase, primarily fueled by successful new product launches and strategic market share gains in specific therapies. The Ex-US Generics segment also delivered an impressive 31% year-on-year growth, a testament to the company's expanding offerings and enhanced market coverage. Even the API (Active Pharmaceutical Ingredient) business contributed positively, growing by 15% year-on-year, largely due to volume expansion.

Strategic Initiatives and Future Outlook

Alembic Pharmaceuticals is not just focusing on current performance but is also making strategic moves for future growth. A significant development this quarter was the acquisition of Utility Therapeutics, marking the company's entry into the US branded drugs market. This move introduces Pivya, a product targeting urinary tract infections, and grants Alembic marketing exclusivity in the US. While this initiative is expected to incur some near-term profitability impact due to initial investments in marketing and building a field force, management is confident about its medium to long-term market opportunity, targeting a stable 30 million prescriptions. The first full quarter of launch for Pivya is anticipated in Q1 FY27.

In the US Generics space, the company launched seven products in the first half of FY26, bringing its total commercialized products in the US to 170. An additional 10+ product launches are expected in the second half of FY26, with new facilities poised to contribute to future growth. The company is also evolving its portfolio in complex platforms and specialty divisions, indicating a strategic shift towards higher-value products.

R&D Focus and Global Expansion

Alembic's commitment to R&D remains strong, with annual guidance maintained at INR 600-650 crore. The focus is on complex and high-value areas such as injectables, peptides, oral solids, and drug discovery, with an emphasis on early entry opportunities. The company has invested in a peptide lab and is developing products like Mounjaro Tirzepatide, though GLP-1 approvals are still some time away. This sustained investment in R&D is crucial for building a robust pipeline that will support future growth and competitive positioning.

Globally, the Ex-US Generics business is expected to maintain its momentum, with a projected 15-20% growth by year-end. The company's key partnerships in Europe, Canada, Australia, Brazil, and South Africa are active, and future growth will be supported by a robust pipeline of product launches and strategic expansion into new markets. Despite continued pricing pressures in US Generics and API, Alembic aims to improve its EBITDA margin to 18-19% in the next year and reach 20% levels in the next couple of years, driven by growth across all sectors and improved utilization of its injectable and onco facilities.

Concluding Thoughts

Alembic Pharmaceuticals' Q2 FY26 results underscore a period of strategic clarity and disciplined execution. The company's ability to deliver broad-based revenue growth, coupled with its strategic entry into the US branded market and sustained R&D investments, positions it favorably for long-term value creation. Management's focus on operational excellence, capacity utilization, and a robust product pipeline reinforces confidence in its future trajectory, aiming for sustained growth and improved profitability in the coming years.