Encube Ethicals IPO

The global topical molecule pharmaceutical market grew from USD 43 billion in FY21 to USD 59 billion in FY26. It is expected to reach USD 86 billion by FY31F, implying a 7.20% CAGR between FY21 and FY31F.  

Prescription products accounted for 62.26% of the global market in FY26. However, the OTC segment is expected to grow faster, with an estimated 8.22% CAGR between FY21 and FY31F, compared with 6.59% for Rx products.  

Generic medicines accounted for 77.99% of the global topical market, valued at around USD 46 billion in FY26, while innovator products accounted for the remaining 22.01%.  

The US, UK, Germany and India together accounted for around 38.13% of the global topical market in FY26, with a combined market size of approximately USD 23 billion.  

The US topical market increased from USD 12 billion in FY21 to USD 15 billion in FY26 and is projected to reach USD 22 billion by FY31F, registering a 7.18% CAGR between FY26 and FY31F.  

Prescription products made up 94.63% of the US topical market in FY26. Generic products accounted for 57.81% of the market value.  

While creams remained the largest formulation segment in the US, specialised products such as hormonal transdermal patches and vaginal devices are expected to record faster growth.  

The global topical molecule CDMO market was valued at USD 5 billion in FY26 and is expected to reach USD 8 billion by FY31F, implying an 8.00% CAGR.  

Topical CDMO outsourcing is expected to increase from 26.50% in FY26 to 30% by FY31F, as pharmaceutical companies increasingly outsource drug development and manufacturing.  

India benefits from skilled scientific talent and lower manufacturing costs, with production costs estimated to be 30%-40% lower than comparable in-house manufacturing costs in the US and Europe.  

India’s topical market was valued at ₹145 billion in FY26 and is projected to reach ₹224 billion by FY31F, representing a 9.15% CAGR.  

Dermatology applications account for more than 95% of the Indian topical market. Cosmo-dermatology was the largest segment at ₹51 billion, or 35.32%, in FY26 and is projected to grow at a 13.59% CAGR through FY31F.  

The Indian topical market has a strong presence of established brands, supported by physician recall and consumer loyalty, which can create entry barriers for new players. 

Global Generics: The company develops and manufactures generic topical products, with the US as its key market. As of March 31, 2026, it had commercialised 51 ANDAs in the US and ranked among the leading topical generic players by volume in the country.  

Global CDMO: Encube provides formulation development and manufacturing services to pharmaceutical companies for branded prescription and OTC products. It serves customers across multiple regulated international markets.  

India Branded Formulations: This segment focuses on branded and generic topical products in India, including consumer healthcare products. The company acquired the Soframycin brand family from the Sanofi group in FY21/FY22. Its domestic distribution network includes more than 450,000 retailers, 2,500 distributors and 11 carrying and forwarding agents.  

Encube operates manufacturing facilities in Goa and Indore with an installed capacity of 15,624 metric tonnes. Its Goa facility is accredited by 11 global regulatory authorities, including the USFDA, EU GMP, Japan PMDA and Health Canada. The company has also reported zero OAI classifications and zero product recalls since the start of its operations.  

The company’s USFDA-approved Encube Advanced Research Centre in Palava, Mumbai, spans 117,252 sq. ft. and has 228 employees, including 12 PhDs. As of FY26, Encube had 130 ANDAs filed or approved and received 25 topical ANDA approvals between FY24 and FY26.  

Encube entered the US topical generics market six years ago and became the third-largest player by volume, with a 12.18% market share in FY26. Its volumes grew at a 51.42% CAGR between FY24 and FY26.  

Encube provides development and manufacturing services to more than 160 CDMO customers across 50 countries. Some of its customer relationships have expanded substantially over the years, supporting the company's presence in international markets.  

The company operates across Global Generics, Global CDMO and India Branded Formulations using a shared platform. Its integrated R&D, manufacturing and sourcing capabilities help it use resources across business segments. In FY26, Encube reported an EBITDA margin of 35.88% and ROCE of 32.30%.  

Founder and Managing Director Mehul Madhusudan Shah has more than 30 years of experience in the pharmaceutical industry. The company also has institutional backing from Frontier Investment Holdings, supported by Quadria Capital.  

Encube's addressable topical generic market across the US, UK and Germany is estimated at USD 8 billion and is expected to increase to USD 13 billion. The company is also targeting higher-value opportunities, with USD 0.6 billion of Paragraph IV applications filed and another USD 1.5 billion under development in the US.  

Encube is expanding beyond conventional creams and ointments into products such as hormonal and non-hormonal transdermal patches and specialised vaginal devices. These products can provide access to higher-barrier segments of the topical market.  

Global topical CDMO outsourcing is projected to increase from 26.50% in FY26 to 30.00% by FY31F. Encube plans to expand relationships with existing customers while targeting OTC products, private labels and white-labelling opportunities.  

Following its acquisition of the Soframycin brand family, Encube is expanding its presence in India's topical market. It plans to introduce new brands, build a dedicated medical field force and selectively acquire complementary dermatology brands.  

With 15,624 metric tonnes of installed capacity, Encube has scope to support additional product launches and CDMO projects. The company is also implementing digital manufacturing systems, including MES, industrial IoT and automated storage systems, to improve production efficiency and traceability. 

Encube and its subsidiaries are involved in several legal and regulatory matters. The US Department of Justice is investigating its US subsidiary, Encube Ethicals Inc., over an alleged false Medicare claim involving the labelling of a topical product. 

The company is also contesting a ₹98.42 crore GST liability, along with interest and penalties. In addition, Incyte Corporation has filed a patent infringement lawsuit related to Encube's Ruxolitinib Cream 1.5% ANDA, which could affect the product's US launch timeline.  

The top 10 customers accounted for 59.74% of revenue in FY26. Most customer contracts do not include minimum purchase commitments, so a reduction in orders from major customers could affect revenue.  

Products manufactured for the US contributed 64.70% of total revenue in FY26. Changes in US regulations, pricing policies, trade restrictions or tariffs could affect the company's business and profitability.  

The top 10 raw material and packaging suppliers accounted for 35.40% of total purchases in FY26. Supply disruptions, import delays or changes in supplier terms could affect production.  

The Goa facility contributed 85.12% of total revenue in FY26. Any operational disruption, regulatory action, power outage, labour issue or natural disaster at the facility could materially affect production and revenue.  

While the Indore facility operated at 96.67% capacity utilisation in FY26, the specialised Hormone Unit operated at only 40.28%. Lower utilisation at certain facilities could result in under-absorption of fixed costs.  

Encube invests significantly in product development. However, regulatory rejection or delays in approvals for its pending ANDAs and European dossiers could affect the returns from these investments.  

Encube's US subsidiaries have historically reported losses and negative operating cash flows. The parent company had provided corporate guarantees backed by Standby Letters of Credit of ₹198.80 crore for loans taken by Encube Ethicals Inc. as of March 31, 2026.  

The company has been unable to trace certain historical corporate records and filings with the Registrar of Companies. This could result in future regulatory or statutory issues.  

Promoter group entity Confira Laboratories Private Limited is authorised to operate in a business similar to Encube's. Although measures are in place to address potential conflicts, the overlap remains a structural risk.  

Encube does not own the land and properties used for its corporate office and primary manufacturing facilities. Its operations therefore depend on the continuation of lease and licence arrangements. 

Encube Ethicals IPO DRHP 

JM Financial Limited 

Contact Number: 022-49186000 

Email Address: encubeethicals.ipo@in.mpms.mufg.com