Cheplapharm Arzneimittel: Attractive Carry and Deleveraging Path Support CreditBuy

Research evidence excerpt

Cheplapharm Arzneimittel: Attractive Carry and Deleveraging Path Support CreditBuy

Deutsche Bank

Research

Europe Company Date

15 May 2026

High Yield Corporates Cheplapharm

Healthcare

Arzneimittel

Attractive Carry and Deleveraging Path

Support CreditBuy

Mehmet Dere

Recommendation Research Analyst

We are upgrading our recommendation on Cheplapharm's debt stack to CreditBuy. +44-20-754-12647

This reflects our view that the bonds are particularly attractive for strategies seeking

Abhijeet Banerjee

low cyclicality, especially given the stabilization of bond prices following a sell-off Research Associate

a year ago. We anticipate this stability will persist, underpinned by ongoing organic

deleveraging of approximately 0.2-0.3x annually, with potential for further

acceleration through strategic M&A. Management's proactive approach to debt

refinancing further enhances the attractiveness of the front end of the debt stack for

short-duration strategies, despite the current rating.

Our CreditBuy recommendation is primarily driven by::

1. Operational Turnaround & Enhanced Visibility: Cheplapharm has made

significant strides in its transformation, successfully completing primary tech

transfers for Zyprexa, as also evidenced by positive like-for-like sales growth on a

full year basis. This progress has enhanced business visibility, with management

consistently achieving guidance.

2. Stabilized Earnings & Manageable Organic Decline: While the total brand

portfolio experienced a 2.7% decline following the significant underperformance in

Q3/Q4 2024, commercial EBITDA from its top 10 brands grew by 2.3% year-on-year.

Management's guidance incorporates a normal low single-digit organic decline in

revenue and EBITDA for 2026. We anticipate a more pronounced decline in Q1 2026