Dr Reddy's net profit beats estimates despite 14% dip, set for India semaglutide launch

Hyderabad-based Dr Reddy’s Laboratories beat street estimates in the third quarter, reporting revenue of ₹8,726.8 crore and profit after tax (PAT) of ₹1,210 crore, with steady India growth and favourable forex helping offset the loss of Revlimid sales in the US.

A Bloomberg poll of 24 and 22 brokerages had pegged the drugmaker’s consolidated revenue at ₹8,338 crore and its profit after tax at ₹1,089 crore, respectively.

The firm’s revenue grew nearly 4.4% year-on-year (y-o-y) but marginally declined sequentially by 0.9%, while its profit after tax was down 14% y-o-y, and 16% quarter-on-quarter (q-o-q), as product-specific headwinds persisted.

Its Earnings Before Interest, Taxes, Depreciation, and Amortization (Ebitda) was down 11% y-o-y to ₹2,049 crore, with margins contracting to 23.5% from the previous year’s 27.5%.

“Our growth in Q3FY26 was supported by continued momentum in our branded businesses, aided by favourable forex, thus offsetting the impact of lower Lenalidomide sales. We continue to focus on disciplined execution of our strategic priorities of base business growth, pipeline advancement, operational efficiencies, and select inorganic opportunities, to create long-term value for our stakeholders,” co-chairman and managing director G.V. Prasad said in a statement.

Dr Reddy’s revenue in North America declined 12% y-o-y and 9% sequentially to ₹2,964 crore, primarily due to higher price erosion and lower sales of Lenalidomide (Revlimid).

Dr Reddy’s was one of the Indian generic drugmakers to reach a settlement with the innovator of the blood cancer medicine Revlimid (Lenalidomide), Celgene, to sell the drug in restricted quantities from 2022 until its patent expires this month.

The company’s revenue from Europe was up 20% y-o-y to ₹1,448 crore, driven by continued traction in its nicotine replacement therapy (NRT) business, new product launches, and favourable forex.

Dr Reddy’s acquired Haleon’s global portfolio of consumer healthcare brands in the NRT category outside of the US in 2024.

Its India business saw robust double-digit growth, with revenue increasing 19% y-o-y to ₹1,603 crore.

The company is preparing to launch semaglutide in India in March, as its patent expires, its management told reporters at a press conference. The company has already secured regulatory approval to launch the medication in India.

“In terms of the India market, we will launch the product, and we also have a few partners to whom we would supply the product,” said CEO, branded markets Ramana M.V. “We have the capacities both with our CMO (contract manufacturing organisation) as well as our own manufacturing facilities,” he said. The drugmaker is also awaiting regulatory approval in Canada, where the patent expired this month, and may receive it any time between now and mid-May, the management said. It plans to launch semaglutide in about 80 countries where patents are set to expire this year.

The firm’s base business in the US, excluding Revlimid, has grown in the double digits, the company’s management told reporters. “We have a very good pipeline of notable products, like Semaglutide and biosimilar Abatacept. In addition to that, we are also working on inorganic opportunities,” CEO Erez Israeli said. The company plans to launch Abatacept in the US in 2027.