Dr. Reddy(US:RDY)2025-07-23 15:00Financial Data and Key Metrics Changes - The consolidated revenues for Q1 FY26 were $997 million, reflecting an 11% year-over-year growth and remaining flat sequentially [7] - EBITDA margin was reported at 26.7%, slightly above the target of 25% [6] - The net profit after tax attributable to equity holders was $166 million, a 2% increase year-over-year but an 11% decline sequentially [11] - Operating working capital increased to $1.55 billion, up by $84 million from the previous quarter [12] Business Line Data and Key Metrics Changes - North American business revenue declined by 17% year-over-year to $400 million, primarily due to price erosion [21] - European generic business revenue was $131 million, a 124% year-over-year increase, driven by new product launches [21] - Emerging market revenue grew by 10% year-over-year, with 26 new products launched [22] - The PSAI business reported revenue of $95 million, showing year-over-year growth but a 14% sequential decline [24] Market Data and Key Metrics Changes - The Indian market reported a revenue of INR 14.71 billion, with a year-over-year growth of 11% and a sequential increase [23] - The Russia business showed a 17% year-over-year growth, indicating resilience despite macroeconomic challenges [22] Company Strategy and Development Direction - The company is focused on optimizing structural costs and driving operational efficiencies while scaling its presence in consumer health, innovative therapies, and biosimilars [15] - Strategic collaborations are being pursued to enhance capabilities, particularly in biosimilars and complex generics [25] - The company aims to maintain a strong balance sheet with a net cash surplus of $341 million [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged softness in the US generic market but expressed confidence in recovery through new product launches [16] - The company expects normalized effective tax rates to remain around 25% for the fiscal year [11] - Management highlighted the importance of upcoming product launches, particularly semaglutide, for future growth [40] Other Important Information - The company received a CDP rating of 'A' in the climate category, reflecting its commitment to sustainability [19] - The company is actively exploring strategic partnerships and acquisitions to diversify its portfolio [25] Q&A Session Summary Question: Performance of the US-based business - Management indicated that the US base business decreased, primarily due to timing issues, and expects flat to single-digit growth for FY26 [32] Question: Outlook for Revlimid - Management anticipates a similar trajectory for Revlimid in upcoming quarters, with a potential decline in Q3 [33] Question: Timeline for semaglutide launches - Management expects to launch semaglutide in Canada and other markets in calendar 2026, with a focus on capacity [40] Question: Gross margin trends - Management expects gross margins to remain stable for the year, with SG&A costs projected to be in the 28-29% range [45] Question: Cost-saving measures - Management indicated potential cost savings of 500 to 600 basis points, translating to significant savings, but emphasized that not all savings would be realized [63] Question: Update on biosimilar abatacept trials - Management confirmed that the readout for the phase two trial is expected on November 25, with plans to submit a BLA thereafter [60] Question: Capacity for semaglutide - Management expressed confidence in the ability to sell the planned 12 million pens, citing strong demand [72]