Dr Reddy's Labs rallies 4%, hits over four-month high; here's why

Alvotech and Dr Reddy's entered into a collaboration and license agreement to co-develop, manufacture and commercialize a biosimilar candidate to Keytruda (pembrolizumab) for global markets.

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Share price of Dr. Reddy’s Laboratories today

 

Shares of Dr. Reddy’s Laboratories hit an over four-month high at ₹1,301.70, as they rallied 4 per cent on the BSE in Thursday’s intra-day trade after the pharma company and Alvotech entered into a collaboration and license agreement to co-develop, manufacture and commercialize a biosimilar candidate to Keytruda (pembrolizumab) for global markets.

 

At 09:24 AM; the stock was trading 3.8 per cent higher at ₹1,300.10, as compared to 0.17 per cent rise in the BSE Sensex. The counter saw huge trading volume, with a combined 700,000 shares changing hands on the NSE and BSE. Currently, the stock trades at its highest level since January 2025. It had hit a 52-week high of ₹1,420.20 on August 21, 2024.

 

Meanwhile, in the past one month, Dr. Reddy’s has outperformed the market by surging 11 per cent. In comparison, the BSE Sensex was up 0.6 per cent and BSE Healthcare index gained 1.6 per cent during the same period.

 

What’s fuelling the 4% rally in Dr. Reddy’s stock price?

 

Alvotech, a global biotech company specializing in the development and manufacture of biosimilar medicines for patients worldwide, and Dr. Reddy’s Laboratories, along with its subsidiaries, today announced that the companies have entered into a collaboration and license agreement to co-develop, manufacture and commercialize a biosimilar candidate to Keytruda (pembrolizumab) for global markets. Keytruda (pembrolizumab) is indicated for the treatment of numerous cancer types. In 2024, worldwide sales of Keytruda were $29.5 billion. 

 

The collaboration combines Dr. Reddy’s and Alvotech’s proven capabilities in biosimilars, thereby speeding up the development process and extending the global reach for this biosimilar candidate.

 

Under the terms of the agreement, the parties will be jointly responsible for developing and manufacturing the biosimilar candidate and sharing costs and responsibilities. Subject to certain exceptions, each party will have the right to commercialize the product globally. 

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JM Financial Institutional Securities views on Dr Reddy’s post Q4 results

 

Analysts at JM Financial Institutional Securities maintain a 'BUY' rating on Dr. Reddy’s Labs with a target price of ₹1,418.

 

The brokerage firm expects the FY26 topline to grow at 23 per cent with Earnings before interest, taxes, depreciation and amortisation (EBITDA) margins to remain at similar levels as FY25. 

 

Analysts said they revised FY26E topline upwards by 8 per cent on account of expected Revlimid sales being greater than those earlier anticipated.  Beyond FY26, Semaglutide and Biosimilars (including Abatacept) are expected to drive business performance. Dr. Reddy’s plans to be present in all Semaglutide markets losing exclusivity in CY26, while Abatacept is scheduled for launch in CY27. 

 

“We believe the street is underestimating the Semaglutide opportunity for Dr. Reddy’s. While it may not fully replace Revlimid sales, it could substantially mitigate the earnings decline in FY27. Though Canada, Brazil, India and China are the key Sema markets losing protection in CY26, a number of Emerging Market countries too are going off patent and thus we have increased our FY27E sales by 5 per cent leading to a 6 per cent increase in FY27E EBITDA,” JM Financial Institutional Securities said in the Q4 result note.

 

Further, Indian Pharma companies are entering lower earnings growth phase post FY26, thus the brokerage firm said they have reduced the 1 year forward P/E multiple by 19 per cent to 21x. At a 21x PE on FY27 EPS, the stock remains attractive compared to peers.

 

About Dr. Reddy’s Laboratories

 

Dr. Reddy’s Laboratories is a global pharmaceutical company headquartered in Hyderabad, India. Driven by the company’s purpose of 'Good Health Can’t Wait', the company offers a portfolio of products and services including active pharmaceutical ingredients (APIs), generics, branded generics, biosimilars and OTC. 

 

Dr Reddy’s major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. The company’s major markets include - the US, India, Russia & CIS countries, China, Brazil, and Europe.