Dr Reddy's Q2 net profit up 14% despite slump in North America biz

Hyderabad-based pharma major Dr Reddy’s Laboratories (DRL) has posted a 14 per cent rise in consolidated net profit to Rs 1,437 crore for the quarter. Sequentially, profit grew 1.3 per cent, while revenue increased 3 per cent.

 

This is despite its largest market, North America, witnessing a 13 per cent year-on-year (Y-o-Y) revenue decline in the July–September quarter (Q2FY26) to Rs 3,240 crore from Rs 3,728 crore a year earlier, due to continued price erosion, particularly in Lenalidomide. In contrast, revenue from India touched its highest level in the past five to six quarters, at Rs 8,805 crore, up 10 per cent Y-o-Y on account of robust performance in branded markets.

 

Erez Izraeli, chief executive officer of Dr Reddy’s Laboratories, said, “Price erosion in North America is generally stabilising, but with a portfolio of nearly 300 molecules, there will always be some products facing pressure. Most of the current erosion is from Lenalidomide.”

 

For H1FY26, profit after tax rose 8 per cent Y-o-Y and revenue grew 11 per cent, led by branded markets and contributions from the Nicotine Replacement Therapy (NRT) portfolio, which offset US softness.

 

Co-chairman and managing director G V Prasad said, “Growth in Q2 was driven by momentum in branded markets and steady contributions from the NRT portfolio, which helped offset the decline in US Lenalidomide sales. We remain focused on strengthening our core business, advancing key pipeline assets, driving productivity, and pursuing business development initiatives.”

 

The company is preparing for a major global rollout of semaglutide beginning 2026, targeting launches across 87 countries in a phased manner. It has received permission from the Central Drugs Standard Control Organisation (CDSCO) to manufacture and market the product in India and plans to introduce it immediately after the patent expires in early 2026.

 

Filings have already been made in countries that do not require a Certificate of Pharmaceutical Product (COPP), while registration work is underway in COPP-dependent markets.

 

Dr Reddy’s expects to bring semaglutide to dozens of countries by FY27, alongside other key products such as abatacept.

 

“We’re keeping cost growth below sales growth to strengthen profitability. On the pipeline side, semaglutide and abatacept are key milestones. We expect semaglutide to launch across several countries by FY26-end and expand to dozens of markets by FY27, while abatacept’s BLA submission is planned in the coming weeks. We hope to launch the product thereafter,” Izraeli added.

 

The company is also expanding capacity — currently around 12 million pens annually — through partnerships and in-house facilities in Visakhapatnam, with the potential to scale up to 50 million units.

 

While it does not plan a licensing deal for tirzepatide with Eli Lilly, management expects the post-patent expiry landscape for GLP-1 drugs to evolve rapidly, driven by broader patient access and competition from multiple Indian players.

 

The results were announced after market hours. DRL’s stock rose 0.3 per cent, ending the day’s trade at Rs 1,284 apiece on the BSE.