RDY Q4 Earnings Beat Estimates, Generics Revenues Rise Y/Y, Stock Up

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$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].