Dr Reddy’s reports muted Q1FY27 results, net profit drops 69%
Dr Reddy’s missed estimates, with revenue down 5.6% to ₹8,071 crore, and profit falling to ₹444 crore.
Hyderabad-based drugmaker Dr Reddy’s Laboratories on Wednesday reported a 69% year-on-year decline in net profit for the June quarter (Q1FY27) due to a drop in US sales and an unexpected setback on semaglutide sales.
The pharma major missed estimates, with revenue down 5.6% to ₹8,071 crore, and profit falling to ₹443 crore. A Bloomberg consensus had estimated net profit at ₹737 crore, and revenue at ₹8,221 crore.
Ebitda dropped 56% from the previous year to ₹1,009 crore, with the margin shrinking 12.5%.
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Dr Reddy’s Laboratories reported a 69% decline in profit due to lower US sales and an unexpected setback in semaglutide sales, particularly following the loss of patent exclusivity for Revlimid.
Dr Reddy’s revenue from the US fell 35% year-on-year to ₹2,205 crore, primarily due to reduced sales of lenalidomide after it lost patent exclusivity earlier in the year.
The company had to halt generic semaglutide sales due to an impurity found in the active pharmaceutical ingredient, which has delayed its market re-entry until approximately November.
Despite setbacks, Dr Reddy’s is optimistic about growth opportunities, focusing on its strong base business in emerging markets and plans for new launches in regions like Latin America and North America.
Dr Reddy’s management is closely monitoring the situation regarding the proposed 200% tariffs on generic drugs, considering the need to adjust pricing strategies while awaiting official guidelines.
However, the company said its base business is growing in double digits across geographies, driven by healthy demand and favourable currency movement.
Its US revenue fell 35% y-o-y to ₹2,205 crore, primarily impacted by lower lenalidomide or Revlimid sales, as the drug lost patent exclusivity earlier this year. However, the India business as well as emerging markets and Europe saw double-digit growth during the quarter, driven by new launches and demand.
Apart from the loss of lenalidomide, which the company had previously guided for, it faced a setback when it had to halt sales of generic semaglutide due to an impurity in the active pharmaceutical ingredient (API).
“We believe that we understand the chemistry and the root cause. We need to test it in batches. So, results from that are likely to be expected around September,” said chief executive Erez Israeli in a post-earnings press conference. “…we should be able to supply the API to our partner, OneSource, and hopefully come back to the market in November.”
While Dr Reddy’s has approval to commercialize the type-2 diabetes and weight loss drug in India and Canada, it also plans to launch in several other countries where the patent is expiring. Due to the API issue, there will be a 3-4 month delay in scale-up plans, but the filings and submissions for approvals are on track, said Israeli.
“The most notable countries, in addition to India and Canada, will be markets like Brazil, Turkey, and Mexico, as well as regions like Latin America and North America,” said Israeli.
The drugmaker expects to sell 6-7 million units of semaglutide this fiscal.
Despite the setbacks, the company’s management is upbeat about the rest of the year. “We are absolutely maintaining the growth trajectory, both in sales as well in profits,” said Israeli, adding that growth in all its markets, including the US, looks promising.
The firm had a net cash surplus of ₹3,058 crore at the end of Q1, and management said it will also focus on scouting for inorganic growth opportunities.
Dr Reddy’s Laboratories stock closed 2.16% lower at ₹1,179.90 apiece on the NSE on Wednesday, largely due to a wider reaction after US President Donald Trump’s announcement on imposing tariffs on imported generic drugs in 2028.
“The way we see it, we will first of all see what will evolve. What we have is a tweet,” said Israeli, adding that the company will wait for official guidelines, as well as industry bodies in both countries to meet and discuss the way forward, before making any moves.
About the Author
Jessica Jani
Jessica has been tracking the pharmaceutical, life sciences and healthcare sector for Mint since November 2024. Based in the country's financial capital, she reports on everything to do with health and medicines. This includes corporate action, patent wars, deals, startup activity and consumer trends. She also keeps a keen eye on the ever-evolving world wellness and preventive health, which moves faster than regulation can keep up. She has a deep interest in what the future of health looks like and how science, innovation, policy and company decisions inform and impact the health of citizens. She has been a reporter for five years, working with publications like The Core and News18 prior to this, covering various sectors like automobiles, real estate, energy, sustainability and urban mobility. Jessica has a bachelor’s degree in English from St Xavier’s College, Mumbai and a postgraduate diploma in media from Sophia’s College, Mumbai. Her work is driven by a desire to decode how macro decisions and events alter and shape the lives of ordinary people. Drop her a mail or a message to discuss business scoops, exciting new medicines and inventions, or your latest wellness routine.
Source: Livemint — Companies
