For years, Shilpa Medicare built its identity as a niche oncology active pharmaceutical ingredient (API) manufacturer, supplying critical cancer drug ingredients to global pharmaceutical companies.

Today, however, the Raichur, Karnataka-based drugmaker is in the midst of a far more ambitious transformation—evolving from an ingredient supplier into a specialty pharmaceutical and biologics company focused on biosimilars, complex formulations, novel drugs and contract development opportunities.

"Shilpa is building a highly differentiated pharmaceutical platform across complex APIs, specialty formulations, biologics and ADCs (antibody drug conjugates), with integrated CDMO capabilities," management said in its FY26 earnings call, underscoring its intent to move beyond commoditised generic products.

R&D and capex push

The push has come at a steep cost. According to India Ratings & Research, Shilpa has spent over Rs. 800 crore on R&D expenses during FY21-FY25, with capex of over Rs. 1,200 crore. Shilpa spends around 8 percent of its annual revenue on R&D. The company has invested heavily in multiple technology platforms spanning novel chemical entities (NCEs), 505(b)(2) products, transdermal patches, peptide drugs, biosimilars and antibody-drug conjugates (ADCs).

FY26 capital expenditure stood at Rs 361 crore, largely directed towards API, CDMO and recombinant albumin facilities. Management indicated future investments would continue to be funded largely through internal accruals.

The financial impact of this shift is becoming increasingly evident. While API revenue grew only modestly in FY26, formulation revenue surged 74 percent to Rs 498 crore and biologics revenue more than doubled to Rs 151 crore. Consolidated revenue rose nearly 20 percent to Rs 1,538 crore, while EBITDA jumped 37 percent to Rs 434 crore, lifting EBITDA margins to 28.2 percent from 24.6 percent a year earlier.

Monetisation stage

Brokerage houses believe the transition has entered the monetisation phase after years of heavy spending on R&D, manufacturing infrastructure and niche technology platforms. They say formulations, biologics and specialty products are contributing an increasing share of revenue, reducing dependence on the traditionally cyclical API business.

"R&D monetisation has started," DAM Capital said in its initiation report

Antique projects revenue and EBITDA to grow to Rs 1,818 crore and Rs 556 crore, respectively, in FY27, with EBITDA margins expanding to 30.6 percent. The brokerage forecasts revenue, EBITDA and profit after tax to compound at 20 percent, 28 percent and 28 percent, respectively, during FY26-28, driven by specialty formulations, biologics and CDMO opportunities.

Those investments have also helped build a broad pipeline for the future. Shilpa currently has three US-focused new chemical entity (NCE) programs, including one commercialised in FY26, another in Phase III studies and a third developed with Unicycive Therapeutics awaiting approval in FY27. The company has also added more than 50 oncology molecules targeting blockbuster drugs losing patent protection through 2032.

The formulations business is becoming a major growth engine. Products such as NorUDCA, Rotigotine transdermal patch, Enzalutamide tablets, Ondansetron Extended Release Injection and Abraxane are expected to strengthen its specialty portfolio. NorUDCA, launched in India in FY26, is already seeing "steep quarter-on-quarter growth", according to management. NorUDCA (24-norursodeoxycholic acid) is a novel, first-in-class modified bile acid used to treat metabolic dysfunction-associated steatotic liver disease

The company is advancing biosimilars such as Adalimumab, Aflibercept and Nivolumab while also working on new biological entities. Its recombinant human albumin program—considered one of the company's most differentiated assets—has entered late-stage development and could address a market constrained by limited plasma supply. Management has received approval for global Phase III studies and plans commercialisation over the next few years.

To bolster capabilities, Shilpa has chosen collaborations over outright acquisitions and invested in innovative biotechnology platforms. Collaborations with mAbTree Biologics and Alveolus Bio are supporting its novel biologics pipeline, while the company has expanded its ADC platform with integrated monoclonal antibody, payload-linker and conjugation capabilities. The first fully integrated ADC biosimilar has already completed development.

The company itself acknowledges that the transition is far from complete. It has exited low-margin products such as Azacitidine in the US and is prioritising what management calls "super specialty products."

"Potential Phase 3 data announcement on recombinant Albumin in liver disease will be a key announcement this year as it can be transforming for the company from a long-term growth perspective," the brokerage firm Systematix said in its report.