Zim Laboratories Limited, a pharmaceutical company specializing in novel drug delivery systems, has reported a sequential recovery in its Q2 FY26 performance while navigating through EU-GMP compliance challenges. The company's financial results and strategic initiatives were discussed in detail during their recent earnings conference call.

Financial Highlights

Zim Laboratories posted the following key financial metrics for Q2 FY26:

The company's pharmaceutical segment, contributing 83% of total revenue at INR 732.00 million, grew by 30.70% quarter-on-quarter. However, the nutraceutical segment, accounting for 17% of revenue, experienced a decline primarily due to softer domestic demand.

EU-GMP Remediation Progress

Zim Laboratories is actively working on its EU-GMP remediation and CAPA (Corrective Action and Preventive Action) implementation plan, which remains the company's highest strategic priority. The management has set a target to complete the EU-GMP audit by March 2026, with expectations to resume supplies by Q1 or Q2 of FY27.

Dr. Anwar Daud, Chairman and Managing Director, stated, "We recognize that this certification is critical to unlocking value across our regulated markets. At the same time, we are taking proactive steps to maintain business continuity through alternate measures."

Business Continuity Measures

To ensure uninterrupted supply and maintain business continuity, Zim Laboratories has initiated the following actions:

1. Reviewing orders from emerging markets to broaden the certification base
2. Initiating site transfer projects for key products:
   • Tamsulosin + Dutasteride transfer to a TGA-approved site
   • Dimethyl Fumarate and Azithromycin suspension transfers to EU and MHRA-approved facilities

These strategic moves are expected to have a marginal impact on margins but will reinforce the company's business resilience.

Future Outlook

Zim Laboratories maintains a positive outlook for the remainder of FY26:

• The order book for Q3 remains strong, supported by healthy inflow of PMI orders and gradual pickup in domestic demand.
• FY26 revenues are expected to be in line with FY25 levels.
• The management anticipates a recovery in the nutraceutical segment in H2 FY26.
• The company aims to complete its EU-GMP remediation efforts and secure alternate certifications to position itself for sustained growth and value creation once regulatory clearances are reinstated.

Mr. Zulfiquar Kamal, Director of Finance, added, "Based on our current visibility and order book, we are confident in achieving our projected targets for the fiscal year."

Zim Laboratories continues to focus on strengthening its innovative product pipeline and accelerating filing activity across emerging and regulatory markets. The company invested INR 76.00 million in R&D during Q2 FY26, primarily towards new product development, bioequivalence studies, and regulatory filings.

As Zim Laboratories navigates through its current challenges, the management remains optimistic about the company's long-term prospects, emphasizing its commitment to quality, innovation, and strategic expansion in both domestic and international markets.

Zim Laboratories , a prominent player in the pharmaceutical sector, has announced its financial results for the second quarter and half-year ended September 30, 2025. The company faced headwinds during this period, reporting a consolidated net loss despite a slight recovery in quarterly revenue.

Key Financial Highlights

• Q2 FY2026 Performance: Zim Laboratories reported a consolidated net loss of Rs 42.46 lakhs for Q2 FY2026, a significant downturn from a profit of Rs 238.14 lakhs in the same quarter last year.
• Half-Year Results: For H1 FY2026, the company posted a consolidated net loss of Rs 229.95 lakhs, compared to a profit of Rs 327.97 lakhs in H1 FY2025.
• Revenue: Total operating income for Q2 FY2026 stood at Rs 8,871.13 lakhs, showing a marginal decrease of 3.7% year-on-year from Rs 9,214.33 lakhs in Q2 FY2025.
• EBITDA Margin: The EBITDA margin for Q2 FY2026 was 8.8%, down from 11.8% in the corresponding quarter of the previous year.

Segment Performance

The company's pharmaceutical segment continued to be the primary revenue driver:

• Pharma Business: Contributed 83% (Rs 732.00 crores) to the total revenue in Q2 FY2026, showing a robust growth of 30.7% quarter-on-quarter and 11.9% year-on-year.
• Nutra Business: Accounted for 17% (Rs 155.00 crores) of the total revenue, experiencing a decline primarily due to shortfall in domestic business.

Export Performance

• Q2 FY2026: Export business declined by 4% year-on-year but maintained its contribution at 82% of total revenue, reaching Rs 728.00 crores.
• H1 FY2026: Export business saw a 9.4% year-on-year decline, contributing Rs 1,330.00 crores (83% of total revenue).

Strategic Developments

1. Asset Sale Agreement: During the quarter, Zim Laboratories entered into an agreement to sell one of its unused MIDC leasehold lands, along with the building and certain assets. This transaction is expected to be completed before March 31, 2026.

2. Land Acquisition: Subsequent to the quarter end, the company purchased MIDC leasehold land adjacent to its existing plant, indicating potential for future expansion.

3. R&D Investment: In H1 FY2026, the company allocated Rs 46.00 crores for bioequivalence studies and registrations, advancing its Innovative Products (NIP + OTF) pipeline.

Management Commentary

Anwar S. Daud, Managing Director of Zim Laboratories Limited, stated, "While we faced challenges this quarter, our focus remains on strategic growth and innovation. The pharma segment's strong performance and our continued investment in R&D underscore our commitment to long-term value creation."

Future Outlook

Despite the current setbacks, Zim Laboratories is taking steps to strengthen its market position:

• Continued focus on export markets, which remain the primary revenue contributor.
• Ongoing investment in research and development to enhance the product pipeline.
• Strategic asset management, as evidenced by the land sale and new acquisition, to optimize resources.

The company's performance in the coming quarters will be crucial in determining its ability to navigate the current challenges and return to profitability.

Note: All figures are based on consolidated financial results unless otherwise specified.