Key Takeaways RDY posted Q1 earnings of 20 cents per ADS and $997M in sales; beats consensus Zacks estimates on both counts.Global Generics rose 10%, led by Europe's Nicotine Therapy and strong branded market performance.RDY and ALVO signed a global deal to co-develop a biosimilar to Merck's cancer drug Keytruda.Dr. Reddy's Laboratories Limited (RDY) reported first-quarter fiscal 2026 earnings of 20 cents per American Depositary Share (ADS), which beat the Zacks Consensus Estimate of 18 cents. The company r ...

Dr. Reddy’s Laboratories (RDY) Q1 2026 Earnings Call July 23, 2025 10:00 AM ET Company ParticipantsRicha Periwal - Head - Corporate Analytics, Corporate Strategy & IRM V Narasimham - CFO & Member of the Management CouncilErez Israeli - CEOAmey Chalke - VP & Sector Lead - Healthcare & PharmaceuticalHarith Ahamed - Director - Equity ResearchBino Pathiparampil - Head of ResearchSaion Mukherjee - MD & Head - Equity ResearchSurya Patra - SVPConference Call ParticipantsNeha Manpuria - Senior AnalystDamayanti Kera ...

Dr. Reddy’s Laboratories (RDY) Q1 2026 Earnings Call July 23, 2025 10:00 AM ET Speaker0Good morning, good evening, and a warm welcome to all. Thank you for joining us for doctor Reddy's q one FY twenty six earnings conference call. We truly appreciate your time and participation. Joining us today are members of the leadership team, mister Erez Israeli, our CEO, mister MV Narsimham, our CFO, and the IR team.Earlier today, we released our quarterly financial results. These are now available on our website for ...

Financial Performance - Revenues reached ₹8,545 Cr, showing an 11% YoY growth[9] - EBITDA stood at ₹2,278 Cr with a margin of 26.7%[9] - Profit Before Tax (PBT) was ₹1,905 Cr, representing 22%[9] - Profit After Tax (PAT) amounted to ₹1,418 Cr, which is 17%[9] Segment Performance - Global Generics contributed ₹7,562 Cr, with a 10% YoY increase[13] - North America generated ₹3,412 Cr in revenue, up by 11% YoY[13] - India's revenue was ₹1,471 Cr, marking an 11% YoY growth[13] - Europe reported revenue of ₹1,274 Cr, a significant 142% YoY increase, including revenues from the acquired NRT business[13] - Pharmaceutical Services & Active Ingredients (PSAI) achieved ₹818 Cr in revenue, a 7% YoY increase[13] - Emerging Markets reached ₹1,404 Cr in revenue, showing an 18% YoY increase[13] Financial Position - Net Cash surplus at ₹2,922 Cr as of June 30, 2025[11, 22]

Financial Performance - The company reported a significant increase in revenue, with a total of $1.5 billion for the fiscal year, representing a 15% year-over-year growth[25]. - The user base expanded to 10 million active users, marking a 25% increase compared to the previous year[25]. - The company anticipates a revenue growth of 10% to 12% for the next fiscal year, driven by new product launches and market expansion strategies[28]. Research and Development - Investment in research and development reached $200 million, focusing on innovative drug formulations and advanced technologies[40]. - The company is developing a new biosimilar product expected to launch in Q3 2025, which could capture a market share of 20% in its category[49]. - The company has established partnerships with three contract research organizations to expedite the development of complex molecules[41]. Market Expansion and Acquisitions - The company plans to enter two new international markets by the end of the fiscal year, aiming to increase its global footprint[28]. - A strategic acquisition of a smaller biotech firm was completed for $300 million, enhancing the company's product pipeline[28]. - The company entered into a definitive agreement to acquire Haleon's global portfolio of consumer healthcare brands in the Nicotine Replacement Therapy category for a total consideration of up to Rs.56,121 million (GBP 500 million)[221]. Regulatory and Compliance - Regulatory compliance remains a priority, with ongoing investments in quality control systems to meet U.S. FDA standards[52]. - The U.S. FDA issued a complete response letter (CRL) in November 2024 regarding the biologics license application (BLA) for a biosimilar rituximab, with no certainty on approval timelines[57]. - Changes in regulatory requirements, such as India's UCPMP becoming mandatory in March 2024, may require adjustments in the company's approach[88]. Risks and Challenges - The company faces potential risks from increased competition in the generics market, which could lead to price erosion of up to 15%[30]. - The company faces increased logistics costs due to longer shipping routes and air shipments as a result of geopolitical tensions and military conflicts, impacting operational costs[80]. - The company is exposed to fluctuations in exchange rates, particularly as a significant portion of revenues are in currencies other than the Indian rupee, which may impact financial performance[130]. Economic and Political Environment - The current U.S. presidential administration has implemented numerous executive orders revising tariffs and international trade policies since January 2025, including universal tariffs on imported goods announced on April 2, 2025[58][59]. - The current economic conditions, including high unemployment and inflation, may negatively impact the company's growth and financial position[146][149]. - The company operates in regions susceptible to political and economic instability, which could adversely impact operations and cash flows, particularly in Latin America and the former Soviet Union[74][75]. Environmental, Social, and Governance (ESG) Factors - The company has set ambitious strategic ESG goals, but achieving them is dependent on external factors such as government regulations and the availability of renewable energy[159]. - The company must navigate complex ESG reporting requirements, which could affect its reputation and growth if not managed properly[154]. - The evolving environmental regulations may require the company to incur additional compliance costs, impacting its financial position[124]. Litigation and Legal Risks - The company is involved in various litigations regarding patent validity, which could affect its results of operations and financial condition[141]. - The company may face significant liabilities if it sells generic products before resolving patent litigation, which could adversely affect its business[125]. - The company is at risk of litigation related to off-label marketing practices, which could result in significant penalties and affect its operations[144]. Operational Challenges - The company is actively managing third-party relationships to ensure timely supply of active pharmaceutical ingredients (APIs) and raw materials, but any disruptions could lead to production capacity loss[95]. - The company may experience difficulties in attracting and retaining qualified personnel, which is critical for business development[98]. - Approximately 1.7% of the company's employees are part of various labor unions, which could impact production capacity and overall profitability if issues arise[164].

Core Insights - Alvotech has partnered with Dr. Reddy's Laboratories to co-develop a biosimilar candidate to Keytruda, which is used for various cancer types [1][2] - Keytruda generated worldwide sales of $29.5 billion in 2024, highlighting the potential market size for the biosimilar [2] - The collaboration aims to leverage both companies' strengths in biosimilars to expedite development and enhance global market access [2] Company Developments - The agreement stipulates that both parties will share responsibilities and costs associated with the development and manufacturing of the biosimilar candidate [2][3] - Alvotech recently acquired the R&D operations of Xbrane Biopharma for approximately SEK275 million (around $27 million), which includes a biosimilar candidate based on Cimzia [4] - HSBC has upgraded Dr. Reddy's Laboratories from Hold to Buy, increasing the price forecast from $14.44 to $16.9 [4] Market Performance - As of the latest update, Dr. Reddy's Laboratories (RDY) stock rose by 6.07% to $15.65, while Alvotech (ALVO) stock decreased by 2.49% to $10.56 [7] - Analysts often utilize earnings growth and fundamental research for valuation, while some traders rely on technical analysis for stock price predictions [5][6]

Core Insights - Dr. Reddy's Laboratories (RDY) has entered into a collaboration and license agreement with Alvotech (ALVO) to co-develop and commercialize a biosimilar candidate to Merck's Keytruda, a leading PD-L1 inhibitor [1][8] Group 1: Collaboration Details - The agreement entails that RDY and ALVO will jointly share all costs associated with the development and manufacturing of the biosimilar candidate [3] - Both companies will retain the rights to commercialize the product globally upon successful development [3][8] Group 2: Market Impact - The collaboration is expected to significantly enhance Dr. Reddy's biosimilar portfolio, particularly in emerging markets, and strengthen its capabilities in oncology [4][8] - Keytruda generated sales of $29.5 billion in 2024, with a year-over-year growth of 6% to $7.21 billion in Q1 2025, highlighting the potential market opportunity for the biosimilar [2] Group 3: Previous Agreements - RDY and ALVO had previously signed a license and supply agreement in 2024 for the commercialization of AVT03, a biosimilar candidate to Amgen's Prolia and Xgeva [9] - The FDA accepted a regulatory filing for AVT03 in March 2025, indicating progress in their biosimilar development efforts [9][10] Group 4: Strategic Focus - The introduction of AVT03 could enhance patient access to affordable treatment options for osteoporosis and other bone-related conditions, addressing a significant healthcare need [11][12] - Dr. Reddy's is actively diversifying its generics portfolio to strengthen its market position [12]

Group 1 - The article discusses Dr. Reddy's Laboratories (NYSE: RDY) and highlights a strong buy rating based on its lucrative valuation [1] - The author emphasizes a value-focused investment strategy, targeting stocks that are undervalued and have near-term catalysts [1] - The investment horizon mentioned ranges from one quarter to two years, indicating a medium-term investment approach [1] Group 2 - The author has over three years of active investing experience and has worked as a buy-side analyst at a boutique research firm and family offices [1]

Core Viewpoint - Dr. Reddy's Laboratories Limited reported better-than-expected fiscal fourth-quarter results, with earnings and revenues surpassing estimates, driven by growth in global generics revenues [1][2]. Financial Performance - The company reported fourth-quarter fiscal 2025 earnings of 22 cents per American Depositary Share (ADS), exceeding the Zacks Consensus Estimate of 20 cents per share, and up from 18 cents per ADS in the same quarter last year [1]. - Revenues for the quarter grew 20% year over year to $996 million, surpassing the Zacks Consensus Estimate of $867 million [1]. - For fiscal 2025, total revenues reached $3.8 billion, a 17% increase from $3.3 billion in fiscal 2024, with earnings per share totaling 79 cents compared to 78 cents in fiscal 2024 [9]. Segment Performance - Global Generics revenues amounted to INR 75.4 billion, reflecting a 23% year-over-year increase, driven by the acquired Nicotine Replacement Therapy portfolio, higher sales volumes, and new product launches [3]. - Pharmaceutical Services & Active Ingredients (PSAI) revenues were INR 9.6 billion, up 16% year over year, attributed to increased active pharmaceutical ingredients (API) sales volumes and new API product launches, despite adverse price variance [6]. - Revenues in the Others segment totaled INR 132 million, down 91% year over year [6]. Cost and Expenses - Gross margin declined by 300 basis points to 55.6% due to higher price erosion in generics and lower manufacturing overhead leverage [7]. - Research and development expenses increased by 6% year over year to $85 million, reflecting ongoing development efforts across generics, biosimilars, and novel oncology assets [7]. - Selling, general, and administrative expenses totaled $282 million, up 17% year over year, primarily due to increased sales and marketing investments [8]. Regulatory Updates - Dr. Reddy's and partner Alvotech announced the FDA's acceptance of a regulatory filing for AVT03, a proposed biosimilar of Amgen's Prolia and Xgeva, which could enhance patient access to affordable treatment options for osteoporosis [10][11]. - The biologic license application (BLA) for AVT03 was submitted under the FDA's biosimilar application process, with the potential to significantly improve treatment accessibility for a large patient population [12].

Group 1: Licensing Agreements - Dr. Reddy's Laboratories (RDY) and Bio-Thera Solutions have entered into commercialization and license agreements for two proposed biosimilars: BAT2206 (a biosimilar of JNJ's Stelara) and BAT2506 (a biosimilar of JNJ's Simponi) [1][2] - Under the agreement, Bio-Thera will manage the development, manufacturing, and supply of BAT2206 and BAT2506, while Dr. Reddy's will handle regulatory approvals and commercialization in Southeast Asia, including countries like Cambodia, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam [6] Group 2: Market Impact and Strategy - The licensing deal is expected to significantly enhance Dr. Reddy's biosimilar portfolio in emerging markets, aiming to improve patient access to affordable medicines [2] - Bio-Thera plans to leverage Dr. Reddy's extensive resources and expertise in the generics industry to facilitate the availability of BAT2206 and BAT2506 in Southeast Asia, thereby accelerating patient access to high-quality biosimilars [3] Group 3: Product Details - BAT2206 is a human monoclonal antibody with potential applications in treating Crohn's disease and ulcerative colitis, among other autoimmune diseases, and is based on JNJ's Stelara, which is approved for various immune-related conditions in the EU [4] - BAT2506 is also a human monoclonal antibody, targeting conditions such as moderate to severe rheumatoid arthritis and ulcerative colitis, based on JNJ's Simponi, which carries warnings for serious infections and cancer risks [5] Group 4: Broader Initiatives - Dr. Reddy's has been actively diversifying its generics portfolio, including a recent partnership with Alvotech for the proposed biosimilar AVT03, which targets Amgen's Prolia and Xgeva [7][8] - The approval of AVT03 could significantly enhance patient access to affordable treatments for osteoporosis and other bone-related conditions, aligning with efforts to expand the availability of high-quality biologic medicines [9]