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Informist, Wednesday, Jul. 22, 2026

 

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--Dr Reddy's Apr-Jun consol net profit INR 4.44 bln
--Analysts saw Dr Reddy's Apr-Jun consol net profit at INR 7.85 bln
--Dr Reddy's Apr-Jun consol revenue INR 81 bln
--Analysts saw Dr Reddy's Apr-Jun consol revenue at INR 82.43 bln
--Dr Reddy's Apr-Jun consol net profit INR 4.44 bln vs INR 14.18 bln yr ago
--Dr Reddy's Apr-Jun consol revenue INR 81.00 bln vs INR 85.72 bln year ago
--Dr Reddy's Apr-Jun consol EBITDA INR 10.09 bln vs INR 22.78 bln year ago
--Dr Reddy's Apr-Jun consol EBITDA margin 12.5% vs 26.7% year ago
--Dr Reddy's Apr-Jun consol gross profit margin 46.5% vs 56.9% year ago
--Dr Reddy's: Revenue hit in Q1 due to lower revenues from lenalidomide
--Dr Reddy's Apr-Jun N America generics sales INR 22.05 bln, down 35% on yr
--Dr Reddy's Apr-Jun Europe generics sales INR 14.44 bln, up 13% on yr
--Dr Reddy's Apr-Jun India generics revenue INR 17.18 bln, up 17% on yr
--Dr Reddy's Q1 emerging markets generics sales INR 18.33 bln, up 31% on yr
--Dr Reddy's Apr-Jun global generics sales INR 71.99 bln, down 5% on year
--Dr Reddy's Apr-Jun consol R&D expenses INR 5.77 bln vs INR 6.24 bln yr ago
--Dr Reddy's consol R&D expenses 7.1% of sales in Apr-Jun vs 7.3% year ago
--Dr Reddy's: Launched six new products in North America in Apr-Jun
--Dr Reddy's: New generic pdts, forex gain aided Q1 sales growth from Europe
--Dr Reddy's: Pricing pressure in generics limited sales growth in Europe Q1
--Dr Reddy's: Q1 margin dn YoY on price erosion in N America, Europe generics
--Dr Reddy's: Q1 margin dn YoY on high solvent costs due to West Asia crisis

--Dr Reddy's Q1 consol EBITDA margin, ex-semaglutide API related hit, 15.4% 

--Dr Reddy's: Faced hit of INR 2.4 bln Q1 on semaglutide API related impact 

--Dr Reddy's Apr-Jun capex INR 3.07 bln vs INR 6.83 bln year ago 

 

By Eshitva Prakash

 

MUMBAI – A sharp decline in generic Revlimid sales, which led to weak revenue from North America, along with a significant rise in expenses, dragged Dr. Reddy's Laboratories Ltd.'s net profit and revenue below consensus estimates in the June quarter. The company also reported a sharp decline in profitability, primarily due to price erosion, an adverse product mix, and provisions related to the Semaglutide active pharmaceutical ingredient issue. 

 

The pharmaceutical major reported a near 69% year-on-year fall in consolidated net profit to INR 4.44 billion, marking the third consecutive quarterly decline in its bottom line. The company's net profit missed the already weak Street estimates of INR 7.85 billion, primarily due to weak performance in the US as sales of its generic Revlimid continued to fall. Sequentially, however, net profit more than doubled from the trailing quarter.

 

The company's revenue fell 5.5% year-on-year to INR 81.00 billion, also missing the consensus estimate of INR 82.43 billion. While revenue rose more than 7% from the preceding quarter, it was not enough to offset the sharp year-on-year decline, weighing on the company's gross margin in the June quarter. Meanwhile, the company's other income rose more than 22% to INR 3.55 billion.  

 

The company's total expenses rose nearly 14% on year to INR 79.02 billion. Costs related to the purchase of stock-in-trade jumped over 62% on year to INR 19.74 billion. Its employee benefits expense and costs classified under 'other expenses' were also incrementally higher. Cost of materials consumed, meanwhile, declined nearly 19% on year to INR 16.54 billion. 

 

The company reported an over 76?cline in its tax expenses to INR 1.18 billion. It said the effective tax rate was lower in the June quarter primarily due to a reversal of previously recognised tax provisions following the favourable resolution of tax assessment of a previous year. Favourable jurisdictional outcomes, compared with the year-ago quarter, also helped to keep down the tax expenses. 

 

The company made a provision of nearly INR 2.40 billion towards inventory and other associated costs in the June quarter due to an issue related to the active pharmaceutical ingredient of its Semaglutide pens. The company had earlier detailed that certain batches of Semaglutide were found to be out of specification due to an issue associated with the active pharma ingredient used in the product.

 

Dr. Reddy's Apr-Jun consolidated earnings before interest, tax, depreciation and amortisation more than halved on year to INR 10.09 billion from INR 22.78 billion in the year-ago quarter. Its EBITDA margin also contracted sharply to 12.5% from 26.7% a year ago. Gross profit margin declined to 46.5% from 56.9% a year ago. Excluding the provision for the Semaglutide API issue, the company's consolidated EBITDA margin would have been slightly better at 15.4%.

 

"The on-year decline (in margins) for the quarter was primarily on account of an adverse product mix, primarily on account of reduced sales of Lenalidomide, price erosion in North America and Europe generics, a semaglutide API (active pharmaceutical ingredient) related impact indicated earlier and elevated solvent costs arising on account of the Middle East crisis," the company said in a release.  

 

GEOGRAPHIES

 

The company's global generics revenue fell 5% on year to INR 71.99 billion during the quarter. Barring North America, the company's revenue from generics rose on year for all other geographies it operates in. Favourable foreign exchange rates also supported the overall growth, the company said. 

 

North America sales plunged 35% to INR 22.05 billion due to pricing pressure and Lenalidomide-related impact. During the June quarter, the company launched six new products in North America. Approvals of 76 of its abbreviated new drug applications and three new drug applications are pending as of Jun. 30, the company said. Dr. Reddy's said it was the first company to launch generic Semaglutide injection in Canada. However, it has temporarily halted the supplies after the API issue, which analysts said will damage the company's market share in the country. 

 

Revenue from India increased 17% on-year to INR 17.18 billion in the quarter. Dr. Reddy's launched 7 new brands and 15 of its brands featured in the top 300 selling brands of the Indian pharmaceutical market, the company said. It maintained its leadership in stomatological therapy and was ranked second in vaccine therapy. 

 

The company's sales in Europe rose 13% on year to INR 14.44 billion. During the quarter, the company launched 24 new generic products in the region. The company attributed the decline in sales of nicotine replacement therapy products to a change in the business operating model after Dr. Reddy's integrated Haleon. "This operating model change is profit neutral," the company said. 

 

Drug sales in emerging markets rose 31% to INR 18.33 billion. In Russia, its drug sales rose 28% on year to INR 9.03 billion. For the rest of the world, the company's sales rose 42% on year to INR 7.10 billion. The company got a revenue of INR 8.52 billion from sales of pharmaceutical services and active ingredients in the June quarter, up 4% on year due to momentum in its contract development and manufacturing organisation. During the quarter, the company filed 38 Drug Master Files.

 

The company's capital expenditure declined sharply to INR 3.07 billion from INR 6.83 billion a year ago. Wednesday, the company's shares ended 1.9% lower at INR 1,182.80 on the National Stock Exchange. Dr. Reddy's reported its earnings after market hours Wednesday. End

 

US$1 = INR 96.57

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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