Expanded CDMO And EU Investments Will Unlock Future Injectables Markets

Key Takeaways

• Strong growth in specialty pharmaceuticals and expanded manufacturing capacity position Rovi to benefit from global demand for innovative treatments and enhanced contract manufacturing.
  
• Advancements in proprietary drug development and vertical integration in heparin sourcing support diversified revenue streams and improved profitability amid rising industry competition.
  
• Heavy reliance on a small product portfolio and uncertain CDMO growth, combined with rising R&D costs and unsustainable margin boosts, increase future earnings and revenue risks.

Catalysts

Manufactures, sells, and markets pharmaceutical products in Spain, European Union, OECD countries, and internationally.

• Robust growth in specialty pharmaceuticals, particularly Okedi (with 115% sales growth in H1 2025), and continued international expansion of enoxaparin and Bemiparin biosimilars (with 14% and 38% growth, respectively), position Rovi to capitalize on rising global demand for innovative injectables for chronic conditions, suggesting accelerating future revenue and margin improvement.
  
• Strategic investments in expanding injectable manufacturing and CDMO capacity, backed by government grants (e.g., €36.3 million for LAISOLID) and facility upgrades, lay the groundwork to absorb growing biotech outsourcing and reshoring, enabling greater operating leverage and revenue scalability as pharma companies increasingly require EU-based partners.
  
• Backlog of CDMO contract discussions, launch of major new contracts (with commercial batches starting in H2 2026), and a rich news flow of smaller contract wins reflect strong visibility on durable contract manufacturing revenue that is likely to drive earnings rebound and stability beyond the current transition period.
  
• Advancement of proprietary long-acting ISM formulations (Letrozole and quarterly Risperidone) into late-stage clinical trials signals pipeline-driven growth potential in high-value therapeutic areas, which could materially diversify revenue streams and support long-term earnings expansion once approved.
  
• Vertical integration in heparin sourcing and the decline in raw material costs (down 33% year-over-year for 2025) are improving cost of goods sold and gross margins, positioning Rovi to preserve or expand profitability even as competition in biosimilars intensifies.

Laboratorios Farmaceuticos Rovi Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Laboratorios Farmaceuticos Rovi's revenue will grow by 9.4% annually over the next 3 years.
• Analysts assume that profit margins will increase from 17.7% today to 24.3% in 3 years time.
• Analysts expect earnings to reach €238.1 million (and earnings per share of €4.39) by about July 2028, up from €132.3 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €168.3 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.9x on those 2028 earnings, down from 21.3x today. This future PE is lower than the current PE for the GB Pharmaceuticals industry at 29.6x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.29%, as per the Simply Wall St company report.

Laboratorios Farmaceuticos Rovi Future Earnings Per Share Growth

Risks

• ROVI's overall operating revenue and CDMO sales declined sharply in the first half of 2025 (total revenue down 4%, CDMO sales down 35%), and full-year guidance is for a further mid-single-digit revenue decrease, suggesting structural demand risks or loss of high-margin contracts that may persist and negatively impact future revenues and earnings.
  
• The company is increasingly reliant on the performance of a narrow set of products-specifically low-molecular-weight heparins (enoxaparin and bemiparin) and high-growth brands like Okedi-leaving it exposed to plateauing growth, market saturation, or increased biosimilar/generic competition, which may lead to revenue volatility and margin compression in the long term.
  
• R&D expenses are set to rise significantly over the next 1–2 years (with 2026 called out as "a more expensive year"), but success is uncertain and new products are not yet commercialized, increasing execution risk and putting pressure on net margins and near-term earnings if returns do not materialize as expected.
  
• The strong gross margin in 2025 was partially driven by a temporary 33% drop in raw material prices for heparin, a benefit that may not be sustainable if raw material costs normalize or rise and cost advantages erode, potentially reducing margins and impacting profitability.
  
• The CDMO business, while highlighted as a future "pillar," is currently at a low point, dependent on a return of large contracts and the success of a few high-profile deals; any delays in regulatory approvals, ramp-up, or client expansion could prolong revenue weakness and limit operating leverage, constraining growth and recovery in net earnings.

Valuation

• The analysts have a consensus price target of €78.95 for Laboratorios Farmaceuticos Rovi based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €92.0, and the most bearish reporting a price target of just €68.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €980.0 million, earnings will come to €238.1 million, and it would be trading on a PE ratio of 20.9x, assuming you use a discount rate of 7.3%.
  
• Given the current share price of €55.2, the analyst price target of €78.95 is 30.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.