Zydus Lifesciences Share Price could see significant upside move as Sharekhan Research has suggested BUY Call considering strong fundamentals of the company. Sharekhan Research has issued a Buy recommendation for Zydus Lifesciences Ltd with a revised price target (PT) of Rs. 1,268. The company is advancing its research and development in partnership with the Central Drug Research Institute (CDRI) and has recently launched a Phase-1 trial for a new combination treatment for malaria. Additionally, Zydus received tentative USFDA approval to manufacture Enzalutamide tablets for prostate cancer, with strong market potential in the U.S. Zydus’ robust clinical pipeline and strategic partnerships position it for sustained growth in the pharmaceutical sector.

Partnership with CDRI for Osteoporosis Treatment

Innovative Collaboration Zydus Lifesciences has partnered with CDRI to develop an oral treatment for osteoporosis related to chronic kidney disease (CKD) and post-menopausal conditions. This initiative focuses on small-molecule inhibitors of sclerostin, a protein involved in bone metabolism. The treatment is aimed at addressing the needs of over 10% of the global CKD-affected population.

Phase-1 Trial for Malaria Treatment

Advancing Clinical Trials Zydus has launched a Phase-1 trial for the ZY19489-Ferroquine combination targeting malaria treatment. The trial is currently recruiting 36 patients to assess the safety, tolerability, and pharmacokinetics of this combination, with an expected completion date of February 1, 2025. This is a significant step in developing simplified treatment regimens for malaria.

USFDA Approval for Prostate Cancer Treatment

Tentative Approval for Enzalutamide Zydus has received tentative approval from the USFDA to manufacture Enzalutamide tablets, used in the treatment of castration-resistant and metastatic prostate cancer. These tablets generated annual sales of $1.42 billion in the U.S. as of July 2024, demonstrating substantial market potential.

Robust Clinical Pipeline

Focus on ALS and Ulcerative Colitis Zydus is advancing trials for ZYIL1, currently in Phase-1 and Phase-2 stages for Amyotrophic Lateral Sclerosis (ALS) and undergoing trials for ulcerative colitis. These advancements showcase the company’s focus on expanding its therapeutic portfolio across multiple medical conditions.

Target Price and Valuation

Buy Recommendation with a Price Target of Rs. 1,268 Zydus Lifesciences is well-positioned for significant growth, driven by its strategic initiatives and clinical advancements. The company trades at 23x FY26E and 22x FY27E earnings, with projected EPS of Rs. 45.56 and Rs. 48.75. With its focus on addressing unmet medical needs, particularly in CKD, malaria, and cancer treatments, Zydus is expected to deliver strong performance, with a revised target price of Rs. 1,268.

Key Risks

Challenges in the US Generics Market Price erosion in the U.S. generics business and forex volatility could impact Zydus’ earnings. Regulatory delays and risk concentration in the U.S. market are also potential challenges to the company’s performance.