Cipla stock crashes over 3% as brokerages cut targets on Lanreotide disruption, FY27 risks

Cipla Ltd

• Cipla shares drop 3.48% due to US Lanreotide supply disruption.
• Brokerages cut target prices, citing earnings risks and competition in generics
• Lanreotide production halted for USFDA fixes, resupply due H1 FY27.

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Shares of Cipla Ltd fell sharply on Friday and extended recent weakness, after a series of cautious brokerage notes flagged earnings risks from supply disruptions in its key US product Lanreotide and intensifying competition in other generics.

Cipla stock dropped 3.48 percent to Rs 1,384.6 in early trade. The stock is now down about 4 percent over the past one year, sharply underperforming the Nifty 50, which has risen over 10 percent during the same period.

The decline comes after Cipla disclosed that manufacturing of Lanreotide has been temporarily paused to support USFDA remediation at its European contract manufacturing partner. Lanreotide is among Cipla’s top three products in the US and accounts for about $150 million in annual revenue, with the company holding a 22 percent market share in the product.

Morgan Stanley maintained its Underweight stance on the stock and cut its target price to Rs 1,292 per share. The brokerage warned that the phase-out of gRevlimid and supply disruptions in Lanreotide are likely to weigh on performance, particularly in Q4 FY26. It trimmed earnings estimates by 2 percent for FY26 and 1 percent for FY27, cautioning that any prolonged disruption could result in market share loss and downside risk to FY27 and FY28 earnings.

Nuvama also turned more cautious, downgrading Cipla to Reduce and lowering its target price to Rs 1,360 per share. Nuvama said the expiry of gRevlimid exclusivity, uncertainty around Lanreotide supplies, and rising competition for Cipla’s proposed generic Advair following a recent approval for Lannett pose an earnings challenge for FY27. The brokerage noted that Cipla’s European contract manufacturer Pharmathen has temporarily paused production for remediation, with manufacturing expected to restart only in the first half of FY27, adding near-term uncertainty.

Cipla has said that the Lanreotide manufacturing halt is linked to remediation efforts following a US Food and Drug Administration inspection at Pharmathen’s Rodopi facility in Greece, which resulted in nine observations. The company has indicated that resupply of Lanreotide is expected to resume in the first half of FY27 and that it is closely monitoring supply levels.

Not all brokerages are bearish. Nomura believes the potential loss of Lanreotide sales has largely been priced in, noting that the stock is already down about 6.5 percent since the issue first came to light earlier this month. Nomura has maintained a Buy rating with a target price of Rs 1,770. However, the dominant tone around Cipla remains cautious.

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