In a strategic move to bolster its growth pipeline, Ajanta Pharma Ltd has entered into a significant in-licensing agreement with Biocon to commercialize the blockbuster weight-loss drug, semaglutide, across 26 emerging markets. The announcement, made this week, marks a pivotal step for the pharmaceutical company as it aims to capitalize on the fast-growing global market for GLP-1 therapies.
A Strategic Foray into High-Growth Therapy
The partnership grants Ajanta Pharma the rights to market semaglutide in regions including Africa, West Asia, and Central Asia. The patent for this diabetes and obesity treatment is set to expire in most of these territories by March, paving the way for generic competition. Commercial sales are anticipated to commence in late 2026 or early 2027, following the necessary regulatory approvals.
While the financial impact on earnings will not be immediate, analysts view this as a key driver for the company's medium-term growth trajectory. Brokerage firm PL Capital estimates that semaglutide could contribute approximately ₹200 crore in additional sales for Ajanta by FY28, with healthy margins. This projection is part of the firm's consolidated FY28 revenue estimate of ₹6,966 crore for Ajanta.
Execution with Minimal Risk and Investment
This venture is not a leap into the unknown for Ajanta. The company brings to the table a formidable existing infrastructure, including a strong branded generics presence in over 30 countries and a field force of more than 2,000 medical representatives. This established network significantly mitigates execution risks associated with launching a new product.
Under the agreement, Biocon will be responsible for manufacturing the drug. Ajanta's role will be to leverage its extensive sales and distribution channels across the target markets. This capital-light model, where Ajanta utilizes its current assets, ensures that incremental costs remain low. This approach is expected to preserve the company's robust return ratios, avoiding the dilution that often comes with heavy capital expenditure.
Strengthening an Already Improving Business Mix
The semaglutide deal aligns perfectly with Ajanta Pharma's ongoing strategic shift towards a higher-margin, more predictable business model. Over recent years, the company has deliberately reduced its reliance on the lower-margin, tender-driven Africa institutional business, primarily focused on anti-malarials.
This segment now constitutes just 3% of total revenue, a sharp decline from 9.3% in FY21. Conversely, the high-margin branded generics business has expanded its share from 68% in FY21 to 74% of total revenue currently.
The company's growth engines are firing on multiple cylinders. In the first half of FY26 (H1FY26), the India-branded business grew 14% year-on-year, outperforming the broader market. The US generics business emerged as the strongest performer, surging 42% in H1FY26, fueled by new launches and market-share gains. Management has guided for low-teens growth in Asia branded generics for FY26 and expects the momentum in US generics to sustain.
Ajanta's financial health is underscored by its exceptional cash generation. Over the past decade, the company has converted 99.7% of its cumulative profits into operating cash flows. This strong liquidity provides ample room to pursue growth opportunities like the semaglutide in-licensing deal without straining its balance sheet.
Despite a year-to-date stock decline of about 10%, Ajanta Pharma trades at a price-to-earnings multiple of around 28 times its estimated FY27 earnings. Given its improving business mix, robust cash flows, and strategic moves like the semaglutide agreement, this valuation is considered reasonable for a company transforming into a focused, high-visibility healthcare player.
