RDY Q3 Earnings Match Estimates, Generics Revenues Rise Y/Y, Stock Down

Core Insights - Dr. Reddy's Laboratories Limited (RDY) reported third-quarter fiscal 2025 earnings of 20 cents per American Depositary Share (ADS), matching the Zacks Consensus Estimate, and an increase from 19 cents per ADS in the same quarter last year [1][2] Financial Performance - Revenues grew 16% year over year to $977 million, surpassing the Zacks Consensus Estimate of$875 million, primarily driven by growth in global generics revenues [2] - Global Generics revenues totaled INR 73.8 billion, up 17% year over year, attributed to the recently acquired Nicotine Replacement Therapy (NRT) portfolio, higher volumes, and new product launches [3] - PSAI revenues amounted to INR 8.2 billion, up 5% from the previous year, driven by base business volume momentum and new product launches [5] - Revenues in the Others segment totaled INR 1.6 billion, reflecting a 33% year-over-year increase [5] - Gross margin improved to 58.7% from 58.5% in the year-ago quarter, influenced by a favorable product mix and overhead leverage [6] Expenses and Investments - Research and development expenses increased by 20% year over year to $78 million, driven by ongoing development efforts across generics, biosimilars, and novel oncology assets [6] - Selling, general, and administrative expenses totaled$282 million, up 19% year over year, largely due to costs associated with the NRT business and higher freight costs [7] Pipeline and Regulatory Updates - Dr. Reddy's signed a voluntary licensing agreement with Gilead Sciences to manufacture and commercialize lenacapavir in India and other countries, indicated for the treatment of HIV-1 infection [8][10] - Initial data from the phase I SWASTH study of ribrecabtagene autoleucel for relapsed/refractory multiple myeloma patients showed encouraging results, marking India's first study for this therapy [11] - Regulatory filing for a generic version of Amgen's Prolia and Xgeva was completed by Dr. Reddy's partner, Alvotech [12] - The company launched BixiBat (elobixibat) in India, a first-in-class drug for chronic constipation [12] - A biosimilar of Coherus BioSciences' Loqtorzi was launched in India under the brand name Zytorvi for treating recurrent or metastatic nasopharyngeal carcinoma [13] Market Performance - Shares of Dr. Reddy's have declined 7.4% in the past three months, contrasting with the industry's 12.1% growth [4]