Natco Pharma's cyclical model leaves revenue outlook cloudy

Shares of Natco Pharma Ltd have dropped 38% from the 52-week high of ₹1,505 (December 2024), as the Street grows cautious about its high-risk, high-reward business model.

- Shubham Dilawar

Natco focuses on extremely complex, niche drugs, mainly in cancer treatment, injectables, peptides, and legally challenged patents in the US. Natco doesn’t wait for patents to expire; it challenges them through the Para-IV process.

If Natco wins or settles, it gets permission to launch the generic version early. This brings rewards when it works, but the advantage lasts for a limited period, creating earnings volatility. Revenue fell from around ₹1,371 crore in Q2FY25 to ₹475 crore in Q3FY25, and margins collapsed from nearly 59% to 8%.