"The Rs 10,000-crore Alongside the expansion of the national clinical trials network and strengthening of the CDSCO (Central Drugs Standard Control Organisation) with specialised scientific review and globally aligned timelines, these initiatives will enhance India's capacity to develop complex, high-value therapies, he further said.The addition of new NIPERs (National Institute of Pharmaceutical Education & Research) and the upgrading of existing ones will expand opportunities for advanced scientific educa ...

Core Insights - Dr. Reddy's Laboratories Limited (RDY) reported Q3 fiscal 2026 earnings of 16 cents per American Depositary Share (ADS), matching the Zacks Consensus Estimate, but down from 19 cents per ADS in the same quarter last year [1][5] - Revenues increased by 4.4% year over year to $971 million, but fell short of the Zacks Consensus Estimate of $978 million, primarily due to lower growth in global generics revenues [1][5] Revenue Breakdown - Global Generics revenues reached INR 79.1 billion, reflecting a 7% year-over-year increase, driven by growth in key markets and favorable foreign exchange movements, although North America Generics saw a decline [2][5] - Pharmaceutical Services & Active Ingredients (PSAI) revenues totaled INR 8 billion, down 2% year over year due to lower volume uptake in the active pharmaceutical ingredient (API) business [6] - Revenues in the Others segment were INR 0.1 billion, a significant decline of 92% year over year [6] North America Performance - North America segment revenues decreased by 12% due to lower sales of lenalidomide and increased price erosion in key products [3][5] - As of December 31, 2025, there were 73 generic filings pending FDA approval, including 71 abbreviated new drug applications (ANDAs) and two new drug applications, with 43 of the ANDAs being Para IVs [3] Margin and Expenses - Gross margin fell by 505 basis points year over year to 53.6%, attributed to lower lenalidomide sales, price erosion, adverse product mix in PSAI, and one-time provisions related to new Labor Codes in India [7][5] - Research and development (R&D) expenses were $68 million, down 8% year over year, primarily due to reduced spending in biosimilars [8] - Selling, general and administrative expenses rose to $300 million, a 12% increase year over year, driven by investments in branded franchises and adverse foreign exchange movements [9] Strategic Developments - Dr. Reddy's gained approval for AVT03, a proposed biosimilar to Amgen's Prolia and Xgeva, in the EU and the UK, and launched the product in Germany in December 2025 [12] - The company signed a strategic collaboration with Immutep to develop and commercialize the investigational immuno-oncology therapy eftilagimod alfa (efti) outside major markets, involving a $20 million upfront payment and potential milestone payments of up to $349.5 million [17][18]

Core Insights - Dr. Reddy's Laboratories reported a resilient performance in its fiscal third quarter of FY26, with revenue growth and steady profitability despite product-specific headwinds, particularly lower lenalidomide sales and pricing pressure in generics markets [7] Financial Performance - Profit after tax attributable to equity holders was ₹1,210 crore ($135 million), down 14% year over year and 16% sequentially, with diluted EPS of ₹14.52 [1] - Consolidated revenue rose 4.4% year over year to ₹8,727 crore ($971 million), though it declined 0.9% sequentially [6] - The company ended the quarter with a net cash surplus of ₹3,069 crore ($342 million) and reported free cash flow of ₹374 crore ($42 million) [1] Research and Development - R&D spend was ₹615 crore ($68 million), down 8% year over year, attributed to lower biosimilar development spend as significant investment related to Abatacept has been completed [2] Selling, General and Administrative Expenses - SG&A increased 12% year over year to ₹2,692 crore ($300 million), accounting for about 31% of revenue, reflecting targeted investments in branded franchises and foreign exchange effects [3] Margins - Gross margin fell to 53.6%, down 505 basis points year over year and 104 basis points sequentially, due to lower lenalidomide sales and price erosion in unbranded generics [4] - Reported EBITDA margin was 23.5%, including a one-time provision related to changes in employee benefit obligations; excluding that provision, EBITDA margin was 24.8% [5] Strategic Initiatives - The company is focused on base business growth, efficiency, and advancing key pipeline programs, including collaborations and new product launches [8] - A strategic collaboration with Immutep for commercialization of the immunotherapy drug eftilagimod alpha includes a $20 million upfront payment and potential milestones of up to $350 million [9] Product Launches and Approvals - The company launched a novel recombinant vaccine for hepatitis E virus infection in India and plans to launch semaglutide injection in India on March 21 [10][11] - The company received European Commission approval for its ustekinumab biosimilar and launched the product in Germany [15] Regional Performance - North America generics revenue was $338 million, down 16% year over year, attributed to lower lenalidomide sales and price erosion [18] - Emerging markets revenue rose 32% year over year to ₹1,896 crore, driven by new launches and favorable foreign exchange [21] - India revenue increased 19% year over year to ₹1,603 crore, supported by innovation franchise and new brand launches [22] Future Outlook - Management reiterated its focus on execution, including advancing semaglutide and abatacept, improving base business growth, and pursuing value-accretive acquisitions [23]

Financial Performance - Consolidated revenues for the three months ended December 31, 2025, were Rs. 87,268 million, a 4% increase from Rs. 83,586 million in the same period of 2024[227]. - Gross profit for the same period was Rs. 46,806 million, representing 53.6% of revenues, down from Rs. 49,052 million or 58.7% of revenues in the previous year[243]. - Profit before tax for Q4 2025 was Rs. 15,429 million, down from Rs. 18,742 million in Q4 2024[252]. - Profit for the period in Q4 2025 was Rs. 11,896 million, representing 13.6% of total revenues, compared to Rs. 14,038 million and 16.8% in Q4 2024[254]. - Total revenues for the nine months ended December 31, 2025, were Rs. 260,771 million, an 8% increase from Rs. 240,475 million in the same period of 2024[259]. - Net profit for the period was Rs. 40,261 million for the nine months ended December 31, 2025, representing 15.4% of total revenues, down from 17.2% in the same period of 2024[288]. Revenue Breakdown - Revenues from the Global Generics segment increased by 7% to Rs. 79,113 million, driven by growth in Emerging Markets, Europe, and India[229]. - Revenues from North America decreased by 12% to Rs. 29,644 million, attributed to lower sales prices and volumes of existing products[230]. - Revenues from Europe rose by 20% to Rs. 14,476 million, supported by new product launches and increased sales volumes[233]. - Revenues from India increased by 19% to Rs. 16,032 million, largely due to new product launches and higher sales prices[234]. - Revenues from Emerging Markets surged by 32% to Rs. 18,961 million, with 30 new products launched during the period[237]. - Revenues from the Global Generics segment for the nine months ended December 31, 2025, were Rs. 233,231 million, a 9% increase compared to Rs. 214,187 million in 2024[261]. - Revenues from the Global Generics segment in the "Rest of the World" markets increased by 10% to Rs. 16,422 million for the nine months ended December 31, 2025, compared to Rs. 14,903 million for the same period in 2024[274]. - PSAI segment revenues rose by 6% to Rs. 25,649 million for the nine months ended December 31, 2025, compared to Rs. 24,283 million for the same period in 2024[275]. Expenses - Selling, general and administrative expenses increased by 12% to Rs. 26,918 million in Q4 2025, rising as a percentage of total revenues from 28.9% to 30.8%[246]. - Selling, general and administrative expenses increased by 13% to Rs. 79,001 million for the nine months ended December 31, 2025, representing 30.3% of total revenues[279]. - Research and development expenses decreased by 8% to Rs. 6,149 million in Q4 2025, representing 7.0% of total revenues, down from 8.0% in Q4 2024[247][248]. - Research and development expenses decreased by 8% to Rs. 18,595 million for the nine months ended December 31, 2025, representing 7.1% of total revenues[280][281]. Profitability Metrics - The effective tax rate decreased to 22.9% in Q4 2025 from 25.1% in Q4 2024, with tax expense falling to Rs. 3,533 million from Rs. 4,704 million[253]. - Total gross profit was Rs. 143,573 million for the nine months ended December 31, 2025, representing a gross profit margin of 55.1%, down from 59.5% in the same period of 2024[276]. - For the three months ended December 31, 2025, the total gross profit was Rs. 46,806 million, a decrease from Rs. 49,052 million for the same period in 2024, resulting in a gross profit margin decline from 58.7% to 53.6%[244]. - The gross profit margin for the Global Generics segment decreased to 57.4% in Q4 2025 from 61.3% in Q4 2024, primarily due to price erosion and unfavorable product mix changes[244]. Product Launches and Filings - The company filed four new ANDAs with the U.S. FDA during the period, with 73 filings pending approval as of December 31, 2025[232]. - The company launched six new products in North America and ten new generic products in Europe during the three months ended December 31, 2025[231][233]. - The company launched 18 new products in North America and 31 new generic products in Europe during the nine months ended December 31, 2025[265][267]. Cash Flow and Debt - Net cash from operating activities was Rs. 41,110 million for the nine months ended December 31, 2025, compared to Rs. 24,432 million for the same period in 2024[295]. - Principal debt obligations included short-term borrowings of Rs. 50,286 million as of December 31, 2025[291]. - The company reported a net foreign exchange gain of Rs. 1,510 million for the nine months ended December 31, 2025, compared to a loss of Rs. 403 million for the same period in 2024[286]. Corporate Governance - The shares have been transferred by the Promoters to trusts as per SEBI Order dated December 31, 2024[300]. - The report includes a review by an Independent Registered Public Accounting Firm[301]. - The report was signed by Kumar Randhir Singh, Company Secretary of Dr. Reddy's Laboratories Limited[302].

Financial Performance - The company reported a consolidated revenue of INR 8,727 crores ($971 million), reflecting a year-over-year growth of 4.4% and a sequential decline of 0.9% [7] - The EBITDA margin was reported at 23.5%, which included a one-time provision related to new labor codes; adjusting for this, the underlying EBITDA margin was 24.8% [10][15] - Profit after tax attributable to equity holders was INR 1,210 crores ($135 million), a decline of 14% year-over-year and 16% sequentially [11] Business Line Performance - The North America generic business generated revenues of $338 million, a decline of 16% year-over-year and 9% sequentially, primarily due to lower lenalidomide sales [21] - The European generic business reported revenue of $140 million, showing a growth of 4% year-over-year and sequentially [21] - The emerging market business delivered revenue of INR 1,896 crores, reflecting robust growth of 32% year-over-year and 15% sequentially [22] - The India business reported revenue of INR 1,603 crores, achieving a healthy double-digit growth of 19% year-over-year and 2% sequentially [23] - The PSA business reported revenue of $92 million, resulting in a decline of 5% year-over-year and 15% sequentially [24] Market Performance - The company’s emerging market growth was driven by new product launches and favorable forex, with Russia showing a growth of 21% year-over-year [22] - In India, the company outperformed the Indian pharmaceutical market with a quarterly growth of 12.3% compared to the market's 11.8% [23] Strategic Direction - The company entered a strategic collaboration with Immutep for the commercialization of a novel immunotherapy oncology drug, Eftilagimod Alpha, with potential milestones of up to $350 million [16] - The integration of the acquired nicotine replacement therapy business is progressing well, with 85% of the business now under operational controls [16] - The company is focused on advancing its key pipeline products, including Semaglutide and Abatacept, and aims to enhance its innovation portfolio through strategic collaborations [24] Management Commentary - Management expressed confidence in the sustainability of the strong growth in the India business, attributing it to the performance of innovative products and effective brand strategies [32][45] - The management acknowledged challenges in the U.S. market due to lenalidomide sales decline but noted that the base business is growing [56] - The company is preparing for potential competition in the Semaglutide market but remains optimistic about maintaining a competitive edge [49][51] Other Important Information - The company announced a science-based net-zero climate target, making it the only Indian pharmaceutical company to commit to such a target by FY24 [20] - The company has a net cash surplus of INR 3,069 crores ($342 million) as of December 31, 2025 [12] Q&A Session Question: What is the organic growth for the India business considering the Stugeron acquisition? - Management indicated that organic growth without acquisitions is more than 17% [29][30] Question: What is driving the strong growth in the India business? - The growth is primarily driven by innovative products that are gaining market recognition [32] Question: What are the expectations for Semaglutide approval in Canada? - Approval is expected between February and May, with preparations for a launch in Q4 or Q1 [40][41] Question: How much has lenalidomide contributed to EBITDA margins this quarter? - Management could not disclose specific figures due to confidentiality but noted that the decline in the U.S. is primarily due to lenalidomide [56] Question: What are the timelines for Denosumab and Rituximab in the U.S.? - Denosumab is expected to face delays of at least six months, while Rituximab's re-inspection is anticipated soon [60][66] Question: What is the addressable market for Abatacept in Europe? - The addressable market is estimated to be around $2 billion, with plans to launch in multiple countries [94]

Financial Performance - The company reported a 4.4% revenue growth year-over-year, with consolidated revenues standing at INR 8,727 crores ($971 million) [7] - EBITDA margin was reported at 23.5%, which included a one-time provision related to new labor codes; adjusting for this, the underlying EBITDA margin was 24.8% [10][15] - Profit after tax attributable to equity holders was INR 1,210 crores ($135 million), reflecting a decline of 14% year-over-year [11] - Free cash flow generated during the quarter was INR 374 crores ($42 million) [12] Business Line Performance - North America generic business revenues declined by 16% year-over-year to $338 million, primarily due to lower lenalidomide sales and pricing pressures [21] - The European generic business reported a revenue of $140 million, growing 4% year-over-year [21] - The emerging market business delivered revenue of INR 1,896 crores, reflecting robust growth of 32% year-over-year [22] - The India business reported revenue of INR 1,603 crores, achieving a healthy growth of 19% year-over-year [23] - PSAI business revenue was $92 million, resulting in a decline of 5% year-over-year [24] Market Performance - The emerging market growth was driven by new product launches and favorable forex, with Russia business growing 21% year-over-year [22] - The India business outperformed the Indian pharmaceutical market, with a moving quarterly total months growth of 12.3% compared to the market growth of 11.8% [23] Company Strategy and Industry Competition - The company entered a strategic collaboration with Immutep for commercialization of a novel immunotherapy oncology drug, Eftilagimod Alpha, with potential milestones of up to $350 million [16] - The integration of the acquired nicotine replacement therapy business is progressing well, with 85% of the business now under operational controls [16] - The company is focused on advancing key pipeline products like Semaglutide and Abatacept, with expectations for launches in various markets [17][18] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of growth in the India business, attributing it to innovative products and effective brand strategies [31][45] - The company anticipates competitive pricing in the markets for Semaglutide, with expectations of maintaining healthy prices initially before facing competition [49][51] - Management highlighted ongoing efforts to resolve regulatory observations and maintain timelines for product approvals [60][74] Other Important Information - The company announced a science-based net-zero climate target, making it the only Indian pharmaceutical company to commit to such a target by FY24 [20] - The new labor code provision of INR 117 crores includes retrospective costs, but future impacts on employee expenses are expected to be minimal [84][85] Q&A Session Summary Question: What is the organic growth for the India business? - Management indicated that organic growth is more than 17% without acquisitions [29][30] Question: What is driving the strong growth in India? - The growth is primarily driven by innovative products that are gaining market recognition [32][33] Question: What are the expectations for Semaglutide approval in Canada? - Approval is expected between February and May, with preparations for a launch in Q4 [41][70] Question: How has lenalidomide contributed to EBITDA margins? - Management could not disclose specific figures due to confidentiality but noted that the decline in the U.S. is primarily due to lenalidomide [56][57] Question: What are the timelines for Denosumab and Rituximab in the U.S.? - Denosumab is expected to face delays due to a deficiency letter, while Rituximab is anticipated to undergo re-inspection soon [60][66] Question: What is the addressable market for Abatacept in Europe? - The addressable market is estimated to be around $2 billion, with plans to launch in multiple countries [95][96]

Financial Performance - The company reported a consolidated revenue of 8,727 crores (approximately $971 million), reflecting a year-over-year growth of 4.4% but a sequential decline of 0.9% [5][9] - The EBITDA margin was reported at 23.5%, which included a one-time provision related to new labor codes in India; adjusting for this, the underlying EBITDA margin was 24.8% [4][8] - Profit after tax attributable to equity holders was 1,210 crores (approximately $135 million), a decline of 14% year-over-year and 16% sequentially [9] Business Line Performance - The North America generic business generated revenues of $338 million, a decline of 16% year-over-year and 9% sequentially, primarily due to lower lenalidomide sales and pricing pressures [18] - The European generic business reported revenue of $140 million, showing a growth of 4% year-over-year and sequentially [18] - The emerging market business delivered revenue of 1,896 crores, reflecting robust growth of 32% year-over-year and 15% sequentially, driven by new product launches and favorable forex [19] - The India business reported revenue of 1,603 crores, achieving a healthy double-digit growth of 19% year-over-year and 2% sequentially, attributed to innovation and new brand launches [20] Market Performance - The company’s emerging market segment, particularly Russia, showed a growth of 21% year-over-year and 16% sequentially in constant currency terms, despite adverse macroeconomic conditions [19] - The company continues to outperform the Indian pharmaceutical market, with a moving quarterly total months growth of 12.3% compared to the market growth of 11.8% [20] Strategic Direction - The company entered a strategic collaboration with Immutep for the commercialization of a novel immunotherapy oncology drug, Eftilagimod Alpha, with potential milestones of up to $350 million [13] - The integration of the acquired nicotine replacement therapy business is progressing well, with 85% of the business now under operational controls [14] - The company is focused on advancing its key pipeline products, including Semaglutide and Abatacept, and aims to launch these products in various markets [15][16] Management Commentary - Management expressed confidence in the sustainability of growth in the India business, attributing it to the performance of innovative products and effective pricing strategies [25][30] - The company anticipates a competitive landscape for Semaglutide in Canada but remains optimistic about maintaining healthy pricing [31] - Management indicated that the new labor law provisions would have a limited impact on future employee expenses, estimating a potential increase of less than 50 basis points [42] Other Important Information - The company announced a science-based net-zero climate target, making it the only Indian pharmaceutical company to commit to such a target by FY24 [18] - The company has a net cash surplus of 3,069 crores (approximately $342 million) as of December 31, 2025 [9] Q&A Session Summary Question: How should organic growth for the India business be viewed, considering the Stugeron acquisition? - Management indicated that organic growth without acquisitions would still be above 17% [25] Question: What is driving the strong growth in the India business? - The growth is primarily driven by innovative products that are gaining market recognition [26] Question: What are the expectations for Semaglutide approval in Canada? - Approval is expected between the end of February and May, with preparations for a launch in Q4 [28] Question: What is the outlook for SG&A spend in FY27? - SG&A spend is expected to grow at a slower rate, with a focus on cost containment [55]

Q3FY26 RESULTS UPDATE Dr. Reddy's 1 | September 2025 | Investor Presentation | As per consolidated financial statements under IFRS Safe Harbor Statement Dr. Reddy's •·· ~;• 21 JANUARY 2026 This presentation contains forward-looking statements and information that involve risks, uncertainties and assumptions. Forward-looking statements are all statements that concern plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statemen ...

Industry Overview - The U.S. generic drug market is characterized by persistent price erosion, intense competition, and structurally thin margins, despite steady demand for generics [1] - The industry comprises companies that develop and market chemically or biologically identical versions of brand-name drugs after patent expiration, with competition leading to thin margins [4] Current Trends - Generic manufacturers are focusing on complex generics, injectables, and biosimilars, which offer higher margins and limited competition [2] - The loss of patent exclusivity of branded drugs is a key driver for generic drugmakers, allowing them to file for FDA approval to market generics [5] - Stiff competition arises when branded drugs lose exclusivity, leading to aggressive pricing strategies among generic competitors [7] - Patent settlements are crucial for growth, as they expedite the availability of low-cost generics while also involving costly litigation [8] Market Performance - The Zacks Medical – Generic Drugs industry has outperformed both the broader Zacks Medical sector and the S&P 500 Index, growing over 28% year-to-date compared to 6% and 19% respectively [12] - The industry is currently trading at a forward P/E ratio of 14.37X, significantly lower than the S&P 500's 23.61X and the Zacks Medical sector's 21.09X [16] Company Highlights - **Sandoz**: Achieved net sales of $8.06 billion in the first nine months of 2025, up 5%, driven by strong demand for biosimilars [19] [20] - **Teva Pharmaceuticals**: The world's largest generic drug company, focusing on first-to-file opportunities and complex generics, with a stable U.S. generics business [22] [24] - **Dr. Reddy's Laboratories**: Strong position in the U.S. generics market with 75 generic filings pending FDA approval, focusing on complex generics for growth [28] [29]

Core Insights - Indian drugmaker Dr Reddy's has entered into an exclusive licensing agreement with Australia's Immutep for the manufacturing, development, and distribution of Immutep's cancer therapy [1] Company Summary - Dr Reddy's will be responsible for the manufacturing and distribution of the cancer therapy developed by Immutep, indicating a strategic move to expand its oncology portfolio [1] - The partnership highlights Dr Reddy's commitment to enhancing its capabilities in the oncology sector, which is a growing area in the pharmaceutical industry [1] Industry Summary - The collaboration between Dr Reddy's and Immutep reflects the increasing trend of partnerships in the pharmaceutical industry aimed at accelerating the development of innovative cancer therapies [1] - This licensing agreement may position Dr Reddy's favorably in the competitive oncology market, which is characterized by high demand for effective cancer treatments [1]