Dr Reddy’s Q2 revenue beats estimates buoyed by consumer NRT portfolio

Dr Reddy’s Laboratories beat street estimates in the September quarter, with a revenue of ₹8,805 crore and profit after tax of ₹1,437 crore, buoyed by growth in branded markets and its nicotine replacement therapy (NRT) portfolio.

A Bloomberg poll of 26 brokerages had pegged the drugmaker’s consolidated revenue at ₹8,706.2 crore and its profit after tax at ₹1,397.5 crore.

The Hyderabad-based firm’s revenue grew nearly 10% year-on-year (y-o-y) and 3% sequentially, while its profit after tax was up 14% y-o-y, despite the drag of price erosion in its largest market, the US.

Dr Reddy’s revenue in North America declined 13% y-o-y and 5% sequentially to ₹3,241 crore, primarily due higher price erosion in some key products, including Lenalidomide (Revlimid).

Dr Reddy’s is among Indian generic players to have reached a settlement with the innovator of blood cancer medicine Revlimid or Lenalidomide, Celgene, to sell the drug in restricted quantities until its patent expires this January.

“Growth in Q2 was driven by momentum in branded markets and steady contributions from the nicotine replacement therapy (NRT) portfolio, which helped offset the decline in US Lenalidomide sales,” co-chairman and managing director, G.V. Prasad said in a statement.

The company’s revenue from Europe was up 138% y-oy to ₹1,376 crore, largely driven by the acquired NRT portfolio. The NRT portfolio reported sales of ₹700 crore and accounted for 51% of the revenue from Europe. Dr Reddy’s acquired Haleon’s global portfolio of consumer healthcare brands in the NRT category outside of the US in 2024.

Focus on semaglutide

The company is banking on next year's key new launches, including weight loss drug Semaglutide and biosimilar Abatacept to drive growth after the loss of revenues from Revlimid.

Semaglutide, a weight loss drug by Danish drugmaker Novo Nordisk, goes off patent in 2026 in several countries including India, Canada and Brazil. Dr Reddy’s had earlier indicated it would target 87 countries where the patent is expiring or the drug is not covered under a patent.

n Q2, a subject expert committee of the Central Drugs Standard Control Organization (CDSCO) recommended approval for the Semaglutide injection in India. The company is in the process of filing for regulatory approvals in other countries to export the drug next year, senior management told reporters in a post-earnings interaction on Friday.

“By the end of FY26, we hope we will be able to launch it in several countries…By the end of FY27, we will likely have semaglutide in tens of countries,” chief executive officer Erez Israeli told reporters.

On Thursday, competitor Cipla announced a partnership with innovator Eli Lilly to increase access of its weight loss drug Tirzepatide (Mounjaro) in India. Israeli clarified Dr Reddy’s is not looking at a partnership with Lilly for the drug in India.

The company is focusing on double-digit growth of its base business in the near-term, and is managing costs to increase profitability, said Israeli.

On the issue of US tariffs, he said while President Donald Trump’s 100% import tariffs announced last month do not impact the firm’s generic business, the potential impact on biologics remains to be seen. Biologics are a class of medicines derived from or made in living organisms.

“Right now, we [have] not yet received the formal guidelines,” he said, adding that the company was also not currently planning to invest in manufacturing in the US because of tariff announcements.