More Stories

Informist, Monday, Jan. 12, 2026

By Narayana Krishna

HYDERABAD - Dr. Reddy's Laboratories Ltd. is expected to report a sharply lower net profit due to fading contribution from sales of the generic cancer drug Revlimid in the US, coupled with pricing pressure in its base business. Strong growth in its India business, steady traction in Europe, led by the nicotine replacement therapy portfolio, and healthy momentum in Russia and other emerging markets will prevent the earnings from falling more sharply.

The Hyderabad-based pharmaceutical major is projected to report a 19% on-year fall in its consolidated net profit for the December quarter to INR 11.4 billion, according to an average of estimates from 11 brokerages. The company's revenue for the reporting quarter is seen flat on year at INR 83.8 billion, the estimates show. On a trailing basis, Dr. Reddy's net profit is seen falling 15% and revenue is seen declining 5%, according to the estimates.

The highest net profit estimate for the December quarter is INR 12.6 billion from ICICI Securities Ltd., while the lowest estimate is INR 9.3 billion from JM Financial Institutional Securities Pvt. Ltd. The revenue estimates range from a high of a little over INR 88 billion by ICICI Securities to a low of INR 80.5 billion by Nuvama Wealth Management Ltd. Dr. Reddy's will announce its Oct-Dec earnings on Jan. 21.

END OF REVLIMID BOOST

The company's cancer drug generic Revlimid, which contributed significantly higher numbers to Dr. Reddy's earnings over the last two years, will go off patent in January, which would eventually become a normal generic drug. The patent for Revlimid (lenalidomide) are primarily owned by Bristol Myers Squibb, as Revlimid is a trademark of their wholly owned subsidiary, Celgene Corp. Dr. Reddy's launched the drug in September 2022 with 180 days exclusivity. The fall in sales as well as price is expected to reflect in the company's December quarter US sales.

A blockbuster drug in the beginning, Revlimid has lost its sheen as over 10 companies have launched their respective generic versions, resulting in a steep price fall and erosion of market share. This has clearly impacted the company's US sales, analysts said. While the company may continue the product for some more time, its contribution is expected to fall and stay low, the company had said earlier. Dr. Reddy's does not have any major drug launch in the US that can fill the gap left by this product.

"Revlimid would no longer be part of the US business after over two years, which would bring to light the underlying base business traction," YES Securities (India) Ltd. said.

Most analysts expect Dr. Reddy's to report weak US sales in the December quarter, as pricing pressure in the base business is also likely to weigh on performance and margins.

"Dr. Reddy's is likely to report muted results, with the US generics market is expected to remain muted on a quarter-on-quarter basis due to lower sales from Revlimid and pricing pressures in the base business," HDFC Securities Ltd. said. The brokerage expects the company's US sales to decline 20% on year and 13% on a trailing basis to $390 million, due to negligible Revlimid sales, as well as price and market share erosion in the base business. JM Financial also expects a 20% fall in the company's US sales in the December quarter, while Motilal Oswal sees a decline of 21.6%.

INDIA & OTHER MARKETS

Analysts remain bullish on Dr. Reddy's December quarter sales in India, Europe and emerging markets, led by price hikes, product launches, and improving market share in select products.

In India, the company is expected to benefit from an increase in the price of some regulated products, along with market share gains in some segments. During the quarter, Indian generic drugmakers implemented annual Wholesale Price Index-linked price hikes and National List of Essential Medicines–related price revisions, which directly lifted realisations for several India focused companies including Dr. Reddy's, which has significant presence. The other generic players such as Lupin Ltd. and Cipla Ltd. also expected to report healthy growth in domestic sales based on their therapies, products and segment that drug is in to.

Categories such as chronic therapy, cardiac care, pain management, vaccines, and nutritional products gained momentum during the quarter in India, contributing to overall sales growth, analysts said.

In Europe, Dr. Reddy's is expected to report a 13% on-year growth in sales, led by traction in its nicotine replacement therapy portfolio. In September 2024, Dr. Reddy's had acquired nicotine replacement therapy portfolio for non-US markets from Haleon Plc. Dr. Reddy's is integrating this business and expanding its reach across European markets. The portfolio has been contributing meaningfully to the company's European sales over the last few quarters.

The company's sales in Russia, which forms part of its emerging markets segment, are expected to grow 15% on year, led by volume growth, Kotak Securities Ltd. said. JM Financial expects Dr. Reddy's December quarter growth to be driven mainly by Europe and emerging markets, as these regions are expected to report on-year sales growth of 16% and 13%, respectively.

MARGIN PRESSURE                

Dr. Reddy's is expected to see continued pressure on earnings before interest, tax, depreciation and amortisation margins in the December quarter, as the fading contribution from high-margin generic Revlimid continues to weigh on profitability. Brokerages expect EBITDA margins to contract both on a year-on-year and trailing basis, reflecting lower operating leverage and sustained price erosion in key US products.

Most analysts peg the company's EBITDA margin in the range of 21–23% for the quarter, compared with 26.7%  a year ago. HDFC Securities and Nuvama expect margins to trend towards the higher end of this range, while Motilal Oswal and Prabhudas Lilladher see margins closer to the lower end, citing sharper pressure from the US business and weaker gross margins.

Kotak Institutional Equities expects sequential margin compression, driven by a decline in gross margins due to pricing erosion and a lower contribution from profitable US products. The brokerage noted that steady costs and limited operating leverage could restrict near-term margin recovery, despite healthy traction in non-US markets.

JM Financial and ICICI Securities also expect EBITDA to decline on a year-on-year basis, as growth in emerging markets and Europe may not fully offset the loss of Revlimid-led profits. The average of estimates from 11 brokerages pegs Dr. Reddy's December quarter EBITDA at INR 18.5 billion.

Analysts will keenly watch management commentary on the status of semaglutide approval in Canada, along with the company's broader roadmap for glucagon-like peptide-1 category launches across markets. They will also track updates on the company's US product launch pipeline.

Of the 23 research reports available on the company with Informist, 12 have a 'buy' or equivalent recommendation on the stock with an average target price of INR 1,455, while seven have a 'hold' call on the stock with a target price of INR 1,267 and four have a 'sell' recommendation with an average price target of INR 1,206.

The stock has fallen over 5% since the announcement of its September quarter earnings on Oct. 24. On Monday, the company's shares closed at INR 1,215.50 on the National Stock Exchange, up nearly 0.5%. 

Following are the Oct-Dec earnings estimates for Dr. Reddy's Laboratories Ltd. based on reports from 11 brokerage firms in descending order by the estimate of net profit in INR million:

End

US$1 = INR 90.15

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

Edited by Deepshikha Bhardwaj

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.