Zydus Plans a USD 20 Million Drug Plant in Sri Lanka, With Output Expected in 2028
The innovation-led lifesciences company Zydus Lifesciences Limited is putting down roots in a new market. Together with a local partner, it has signed an agreement with the country’s investment authority to build a factory, backed by a multi-phase budget and a target date for production. The announcement follows a quarter in which sales grew strongly while profit slipped, so investors will be asking how a project like this fits the bigger picture for a group still absorbing several recent acquisitions.
The Nifty 50 traded at 22,960, up 1.49%, while the Sensex gained 1.70% to 74,000 on Thursday. Against the backdrop of a broader market rally, Zydus Lifesciences Limited is in focus after its proposed joint venture with Sunshine Healthcare signed an agreement with Sri Lanka’s Board of Investment to establish a pharmaceutical manufacturing plant in Horana. The project involves a phased investment of over USD 20 million, with commercial production expected to begin in 2028. The shares were trading at Rs. 1,143.20, after opening at Rs. 1,121.00 and touching an intraday high of Rs. 1,150.80 and a low of Rs. 1,114.70. The company had a market capitalisation of Rs. 1,14,024.66 crore.
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Zydus and Sunshine Healthcare Get Set to Build a Medicine Factory in Horana
Zydus Sunshine Lifesciences (Pvt) Ltd, the proposed joint venture between Zydus Lifesciences and Sunshine Healthcare, part of Sunshine Holdings PLC, signed an agreement with Sri Lanka’s Board of Investment on 13 October 2026. The deal clears the way for a pharmaceutical plant in the BOI zone at Horana. The two companies had announced the joint venture on 26 June 2026. The project calls for a phased investment of over USD 20 million on a site of nearly four acres, and commercial operations are expected to start in 2028, subject to project timelines and regulatory approvals. The first phase will produce oral solid dosage forms, which means tablets and capsules, for the Sri Lankan market.
What the Sri Lanka Plant Means for Zydus
The investment is modest next to the size of the business. At the Rs. 95.72 per dollar rate used in the company’s August investor deck, USD 20 million comes to roughly Rs. 191 crore, or about 2.4 percent of the Rs. 8,017 crore Zydus booked as consolidated revenue in the June 2026 quarter. The spending will also be spread over several phases, so the strain on cash should be light. Sri Lanka is already one of the group’s emerging markets for biosimilars, and Zydus has a local subsidiary there. Making medicines on site could help it supply more reliably and compete more directly with local players.
Near-term numbers will not benefit, since production is not expected before 2028. Zydus has also been busy buying businesses. Amplitude Surgical, Comfort Click, the Agenus biologics facilities and Assertio have all joined the group in the past year. Those deals show up in the latest results, where depreciation rose to Rs. 555 crore from Rs. 238 crore a year earlier and finance costs climbed to Rs. 156 crore from Rs. 85 crore. Against that backdrop, a staged commitment in a new market is a measured move rather than another big bet. What investors will watch is whether the venture keeps to its 2028 timeline.
Financial Performance
Looking at the quarterly results of Zydus Lifesciences Limited, the company’s consolidated revenue from operations increased by 22.0 percent YoY, from Rs. 6,574 crore in Q1 FY26 to Rs. 8,017 crore in Q1 FY27, and grew by 5.7 percent QoQ from Rs. 7,587 crore in Q4 FY26.
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Zydus Lifesciences Limited generated 78.6 percent of its revenue from pharmaceuticals, 17.9 percent from consumer products and 3.5 percent from medical technologies in Q1 FY27.
In Q1 FY27, Zydus Lifesciences Limited’s consolidated net profit fell by 35.9 percent YoY to Rs. 940 crore, compared to Rs. 1,467 crore during the same period last year. As compared to Q4 FY26, the net profit has decreased by 26.1 percent, from Rs. 1,273 crore. Higher depreciation and finance costs after the recent acquisitions pulled earnings down, along with net exceptional charges of Rs. 18 crore.
The basic earnings per share decreased by 35.9 percent and stood at Rs. 9.35 as against Rs. 14.58 recorded in the same quarter in the previous year, FY2026.
Why Making Medicines at Home Matters for Sri Lanka and Its Suppliers
Sri Lanka imports most of its medicines, so its supply of drugs depends on how much foreign currency the country can lay its hands on. The shortages seen during its recent currency crunch made that dependence hard to ignore. Every tablet made locally is one that does not have to be paid for in dollars, which is why governments in import-heavy economies keep offering investment zones and incentives like the one at Horana. For Indian drugmakers the logic runs the other way. Building closer to customers can shorten supply lines and soften the effect of exchange-rate swings. Zydus still earns a large share of its income from US generics, so a larger base in emerging markets gives it a way to spread risk. None of this will change the picture quickly, and the payoff will depend largely on how stable Sri Lanka’s economy and currency stay over the next few years.
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Company Overview
Zydus Lifesciences Limited, based in Ahmedabad, makes and sells medicines, consumer wellness products and medical devices. It reported revenue of about US$3 billion in FY26 and runs 44 manufacturing facilities and 10 R&D centres, with roughly 30,000 employees worldwide. It ranks third in US generics by prescriptions, leads oncology in India, and is building up its biosimilars and vaccines businesses.