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Informist, Wednesday, Jul. 22, 2026

 

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--Dr Reddy's: Still expect Q2 EBITDA margin around 20%, excluding Semaglutide
--CONTEXT: Dr Reddy's management comments in a post-earnings analyst call
--Dr Reddy's: Expect to deliver double-digit growth in US in FY27
--Dr Reddy's: Working on acquisition deals across categories
--Dr Reddy's: It is not practical to move mfg ops to US due to costs
--Dr Reddy's: Filed for semaglutide approvals in 70 countries so far
--Dr Reddy's: Freight costs, solvent prices impacted 1% of EBITDA in
--Dr Reddy's: Freight costs, solvent prices impacted 1% of EBITDA in Q1
--Dr Reddy's: Semaglutide API issue won't affect filing of new approvals
--Dr Reddy's: Will not engage contract manufacturers for Abatacept
--Dr Reddy's: Expect healthy sales, margin in nicotine replacement pdts ahead
--Dr Reddy's: Do not expect more pricing pressure on semaglutide in Canada
--Dr Reddy's: Expect semaglutide approval in Brazil in next few weeks
 

 

By Narayana Krishna and Eshitva Prakash

 

HYDERABAD/MUMBAI – Dr. Reddy's Laboratories Ltd. is expecting its earnings before interest, tax, depreciation, and amortisation margins for the September quarter to be around 20%, excluding the diabetes and obesity drug generic Semaglutide contribution, the company management said in a post-earnings analyst conference call. For the June quarter, the company reported a consolidated EBITDA margin of 12.5% against 26.7% a year ago. Excluding the impact of semaglutide, the EBITDA margin was 15.4%. 

The company management said higher freight rates and increased solvent prices due to the war in West Asia impacted the margins for the quarter, besides the absence of high-margin generic Revlimid and Semaglutide sales disruptions.

 

For the June quarter, Dr. Reddy's 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 revenue fell 5.5% year-on-year to INR 81.00 billion. The company missed the consensus estimates on net profit and revenue. More

 

"We are still maintaining what we discussed a few weeks ago, that we are in the neighbourhood of the 20% (margin), that is likely to stay in the next quarter, without Semaglutide," the company's management said. The impact of freight and solvent costs hit 1% of the EBITDA in the June quarter, the company said. 

As the company is expecting to resolve the impurity issues around Semaglutide active pharmaceutical ingredients, normalisation of product sales in India and Canada is seen around November. The company is not expecting any pricing pressure for Semaglutide in Canada as of now. Dr. Reddy's has filed applications for approval of Semaglutide in 70 countries out of 80 that the company is eligible to launch. The company is expecting the launch of the product in Brazil in the next few weeks. The impurity issue is not going to affect any product approvals for the company, the management said.

Dr. Reddy's expects double-digit growth in the US in 2026-27 (Apr-Mar), led by new product launches. On the proposed tariffs by US President Donald Trump, the management said it is not a concern at this stage. "... obviously it's a tweet, and between a tweet to the reality, a lot of things are likely to happen. As we speak, I don't see any reason to be concerned," Erez Israeli, chief executive officer of the company, said. "Even according to the tweet, we are supposed to have two years without tariffs. It's not practical to move any facility in two years," he said. The company said the products contributing to 25–30% of the US revenue are being manufactured by contract manufacturers in the US. 

 

Dr. Reddy's said the company is working on inorganic growth opportunities to put its INR 30 billion cash surplus to use. "Actually (there are) quite a few deals that we are engaging in all sectors... in generics, in innovation, in biosimilars, and hopefully we can announce those deals as we sign them. So the cash and the balance sheet will be used for inorganic (growth)," Dr. Reddy's said.

On its biosimilar product, Abatacept, the company is expecting US regulatory approval by December. The company wants to make the product at its Bachupally plant and is not looking to engage any contract manufacturer. 

 

The nicotine replacement therapy portfolio is expected to continue healthy sales growth and add to the overall margins going ahead, the company said. 

 

On Wednesday, the company's shares ended at INR 1,182.80 on the National Stock Exchange, down 1.9% from the previous close.  End

 

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

 

Edited by Saji George Titus

 

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