Dr. Reddy's (RDY) Q1 Earnings Miss Estimates, Revenues Beat

Core Viewpoint - Dr. Reddy's Laboratories Limited reported first-quarter fiscal 2025 earnings of $1 per American Depositary Share (ADS), missing the Zacks Consensus Estimate of $1.10 per ADS, and down from $1.01 per ADS in the same quarter last year [1][10]. Financial Performance - Revenues grew 14% year over year to $921 million, surpassing the Zacks Consensus Estimate of $862 million, primarily driven by growth in global generics revenues in North America and India [13]. - Global Generics revenues were INR 68.9 billion, up 15% year over year, attributed to new product launches and the integration of a recently in-licensed vaccine portfolio in India, though partially offset by price erosion in certain markets [14]. - PSAI revenues were INR 7.7 billion, up 14% from the year-ago quarter, fueled by revenues from new products and improved volumes in the base business [15]. - Gross margin improved to 60.4% from 58.7% in the year-ago quarter due to a favorable product mix and overhead leverage, although this was partially offset by price erosion in generics markets [16]. - Selling, general and administrative expenses were $272 million, up 28% year over year, primarily due to investments in business growth and other initiatives [21]. Research and Development - Research and development expenses increased by 24% year over year to $74 million, driven by increased spending on ongoing clinical studies and other developmental efforts [7]. Strategic Developments - Dr. Reddy's entered into a definitive agreement with Haleon plc to acquire Nicotinell and related brands in the Nicotine Replacement Therapy category for a total deal value of GBP 500 million, expected to close in the fourth quarter of 2024 [8]. - The company launched three new products in the United States during the reported quarter [22]. - As of June 30, 2024, there were 80 generic filings pending approval from the FDA, including 75 abbreviated new drug applications (ANDAs) and five new drug applications, with 45 of the ANDAs being Para IVs [5]. Regulatory Updates - The advisory committee to the regulatory body in the EU has adopted a positive opinion recommending the approval of Dr. Reddy's proposed biosimilar candidate, DRL_RI, for Roche's Rituxan/MabThera, which will be marketed under the brand name Ituxredi in the EU markets [24].