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Informist, Friday, Feb. 6, 2026

 

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--Dr Reddy's CFO: Four-pronged strategy in place to fill Revlimid exit void
--Dr Reddy's CFO: Aim to maintain double digit growth in base business
--Dr Reddy's: See semaglutide, abatacept launch as next growth drivers
--Dr Reddy's: Cost optimisation a strategic priority now
--Dr Reddy's CFO: Four-pronged strategy in place to fill Revlimid exit void
--Dr Reddy's CFO: Aim to maintain double digit growth in base business
--Dr Reddy's: See semaglutide, abatacept launch as next growth drivers
--Dr Reddy's: Cost optimisation a strategic priority now
--CONTEXT: Dr Reddy's CFO Narasimham comments in an interview with Informist
--Dr Reddy's: Plan to buy brands, eye in-licensing deals going forward
--Dr Reddy's: Plan to use cash for acquisitions in India, emerging markets
--Dr Reddy's: Have enough capacities to meet demand for semaglutide 
--Dr Reddy's: Expect US FDA OK for abatacept biosimilar in July 2027
--Dr Reddy's: Plans to launch abatacept in Europe
--Dr Reddy's: Aim to maintain EBITDA margin at 25% in the long run
--Dr Reddy's: See FY27 capex below INR 20 bln

 

By Narayana Krishna and Sunil Raghu

 

HYDERABAD – Dr. Reddy's Laboratories Ltd. has put in place a four-pronged growth strategy to offset the fall in sales from Revlimid, its blockbuster generic cancer drug that has been a key contributor for over two years, M.V. Narasimham, chief financial officer of the company, told Informist in an interview. Narasimham said the company is sharply focused on execution as it pivots toward new growth drivers following the expiry of the patent on Revlimid. He outlined the steps the company has planned to bridge the gap created by the expiry of the Revlimid patent and the resulting decline in sales.

 

For the December quarter, Dr. Reddy's reported a consolidated net profit of INR 12.10 billion, down 14.4% on year, ending a four-quarter growth streak. Revenue rose 4.4% on year to INR 87.53 billion, the slowest growth in 21 quarters, though both profit and revenue were above the Street's estimates of INR 11.23 billion and INR 83.45 billion, respectively.

 

The earnings performance was weighed down by weak North America sales, which fell 12% on year and 9% from the trailing quarter to INR 29.6 billion, largely due to lower Revlimid sales. Excluding Revlimid, the company's base US business portfolio registered a double-digit growth in the December quarter, a trend Narasimham expects to continue.

 

Elaborating on Dr. Reddy's four-pronged strategy for growth, Narasimham said the first strategic priority is to sustain double-digit growth of its base business, across regions. The second involves taking the diabetes and weight-loss drug Semaglutide and the auto immune drug abatacept to the market in a big way. He identified cost optimisation as the third priority and focus on driving future growth through inorganic opportunities using cash reserves as the fourth priority. The company is also looking to take some of its successful products to international markets as part of its growth strategy, the CFO said.

 

As a first priority, the company will seek to sustain double-digit growth in the base business across regions. The base business of Dr. Reddy's includes core, recurring revenue streams from its established day-to-day operations as global generics sales across North America, India, Russia, and Europe, spanning oral solids, dermatology products, and capsules.

 

Branded generics also form a significant part of the base business, especially in India and other emerging markets where products are sold under established brand names. In addition, the company is working to improve sales from its pharmaceutical services and active ingredients segments. Another key focus within the base business is complex generics and injectables, which offer higher margins, Narasimham said.

 

SEMAGLUTIDE PLAY

The second growth priority for the Hyderabad-headquartered pharmaceuticals major is the launch of semaglutide and biosimilar abatacept, which Narasimham described as key revenue contributors. Semaglutide is a generic of Novo Nordisk's weight-loss and diabetes treatment drug Wegovy. It is expected to significantly help broaden Dr. Reddy's portfolio and market reach.

 

"We are in the process of launching the Semaglutide in India and followed by Canada, Turkey, Brazil, and many other Asian countries," Narasimham said. The company plans to launch semaglutide in India on Mar. 21, the very next day after its patent expires.

 

Dr. Reddy's has already received authorisation from the Drug Controller General of India with Certificate of Pharmaceutical Product known as COPP certification. Certificate of Pharmaceutical Product certifies that the drug meets quality standards for selling in foreign markets. This is an essential certification for companies for international registration, licensing, and for compliance with importing country regulations. This certification allows the company to submit the dossiers directly across multiple international markets, including Africa, Asia, and Latin America, Narasimham said.

 

Narasimham said the company has active pharmaceutical ingredient manufacturing capability and a contract manufacturing setup to fill and finish the semaglutide injection in-house. This, he said, will help overcome any capacity constraints to meet the demand for the drug. "We are also aware that competition is going to be stiff. It is not like if you are alone, but some markets, some period, we are going to be able to look and capitalise how we can capture the good potential of this product," he said.

 

ABATACEPT NEXT IN LINE

Narasimham said while the entire company is working towards semaglutide's success, the next molecule in line is abatacept. An immune-modulating drug used for autoimmune conditions such as rheumatoid arthritis, psoriatic arthritis, and juvenile idiopathic arthritis, abatacept has combined sales of $4 billion -- with US and Europe at $2 billion each.

 

Abatacept has two variants — one is abatacept IV (intravenous) and abatacept SC (subcutaneous). Dr. Reddy's has already filed an application for abatacept IV variant with the US regulator in December and is expecting the approval in next 12 months. The company is also planning to file abatacept SC variant with US regulator this July and expects approval by July 2027.

 

Narasimham said the company is planning to launch both the versions of abatacept in Europe and is expecting the new drug application by July. "We are expecting approval by 12 months in Europe if all goes well as per our plan. Then in mid of 2027, this product will be launched in the UK," he said. Narasimham also does not see any competition for abatacept for at least 18 months, as only one other generic player is in the process of getting approvals.

 

CHASING BRANDS

Dr. Reddy's is planning to utilise its cash reserves to boost in-organic growth opportunities, mostly buying brands and in-licensing deals, Narasimham said. As on Dec. 31, Dr. Reddy's held cash or cash equivalent of INR 30.7 billion. Dr. Reddy's continues to fund its organic growth largely through internal accruals, with quarterly profits supporting business investments. "...we have generated healthy cash flows from our existing businesses," the CFO said.

 

He said the company remains active on the inorganic front and recent acquisition of the Stugeron brand reflects this approach, while several other evaluations are currently underway. Dr. Reddy's announced the acquisition of Stugeron brand portfolio of products from Johnson & Johnson's Janssen Pharmaceutica NV in September 2025, in a deal valued at $50.5 million. The acquisition of nicotine replacement therapy is another successful example of the company's focus on brands, he said. "You will definitely see some announcements, ranging from small to potentially larger transactions," the CFO said, noting that the company has no concerns utilising cash for buyouts.

 

On cash deployment priorities on a geographical basis, the CFO said Dr. Reddy's intends to channel cash primarily into India and other emerging markets, through brand acquisitions and in-licensing opportunities. He added that encouraged by the success of innovative asset licensing in branded markets, the company is in discussions with several Chinese partners. "Our focus is to bring more such molecules to market at affordable costs," he said, adding that this approach aligns with the company's purpose of improving patient access to medicines.

 

Narasimham said innovative assets, especially in the branded markets have seen very good success in India. "If you look at 19% growth in India (in Oct-Dec), it is very solid and this kind of growth is coming when the Indian Pharmaceutical Market (IPM) is reported 11% growth," he said.

 

The nicotine replacement therapy portfolio is contributing significantly to the top line and it will be a sustainable product for a longer period in Europe and other geographies, the CFO said.

 

COSTS, MARGINS & CAPEX

Dr. Reddy's is also working on optimising costs as part of its strategy to drive profit growth, Narasimham said. For the December quarter, Dr. Reddy's sales and general administration expenditure increased 12% on year and 2% on quarter to INR 26.9 billion, led by higher marketing spend in branded business. As a percentage of total revenue, it was 30.8%.

 

However, the CFO said the company is focussed on reducing costs across all categories of businesses. "As a principle, we want to restrict the growth in costs at below 50% of the sales growth," he said, adding that this principle will apply across business units and at the company level.

 

With strengthening base business and cost optimisation, Dr. Reddy's expects its gross margins in global generics business to be in the 50-55% range in FY27.  "Our endeavour is to maintain EBITDA (earnings before interest, tax, depreciation, and amortisation margin) at 25% level. We are working on that," he said without giving a specific guidance.

 

Narasimham said the growth in margins is directly linked to some of the products that the company is planning to launch in the near future and the full potential of some of the products would reflect on margins in March 2028, which may take the EBITDA margins much higher than the target, he said.

 

The company sees its capital expenditure below INR 20 billion in FY27, down from INR 25 billion to INR 27 billion in FY26. The higher capex for FY26 was on account of creating capacities for semaglutide, Narasimham said.

 

On Friday, shares of Dr Reddy's closed at INR 1,241.20 on the National Stock Exchange, slightly down from the previous session.  End

 

US$1 = INR 90.65

 

Edited by Ashish Shirke

 

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