Dr Reddy's Laboratories reported a 36 per cent fall in consolidated net profit to Rs 925 crore for the second quarter of FY27. The company said lower lenalidomide sales in North America hurt results. Co-chairman G V Prasad said, "We continued to improve the overall health of our business."
Hyderabad-based pharma major Dr Reddy's Laboratories (DRL) on Friday reported a year-on-year (Y-o-Y) decline of 36 per cent in consolidated net profit to Rs 925 crore in the second quarter of 2026-27 (FY27). Revenue also declined by 1.5 per cent to Rs 8,670.8 crore.
The company attributed the decline primarily to lower lenalidomide sales in North America. The base business, excluding lenalidomide in North America, continued to deliver double-digit growth.
On a sequential basis, consolidated net profit rose 109 per cent from Rs 443.5 crore in the first quarter of FY27, while revenue increased 7.4 per cent from Rs 8,070.5 crore. The first-quarter figures were weighed down by a Rs 239.7 crore provision for inventory and related costs associated with semaglutide's active pharmaceutical ingredient (API).
Commenting on the results, co-chairman and managing director (MD) G V Prasad said: "We continued to improve the overall health of our business, delivering double-digit base business growth. We remain focused on strengthening our core businesses, enhancing productivity, and investing in strategic growth platforms."
The company's gross margin stood at 52.1 per cent during the quarter, within its guided range of 50-55 per cent. The EBITDA margin was 20.6 per cent, while capital expenditure stood at Rs 186 crore. Free cash flow generated during the quarter was Rs 171 crore.
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In North America, revenue fell 23 per cent Y-o-Y to Rs 2,489 crore on lower lenalidomide sales, even as the base business grew 12.4 per cent, compared with market growth of 2.4 per cent, driven by volumes and new product launches. It launched six products in the US during the quarter and had 80 pending approvals, including three new drug applications (NDAs).
In emerging markets, revenue grew 24 per cent year-on-year and 12 per cent sequentially, supported by new product launches and favourable foreign exchange movements. The company launched 27 products across emerging markets during the quarter.
India revenue grew 17 per cent year-on-year and 8 per cent sequentially, outpacing market growth. The company said it had moved up to eighth position on a moving quarterly total basis in the Indian pharmaceutical market from 10th a year earlier.
However, the company flagged cost pressures arising from the conflict in the Middle East. The management said higher costs of key starting materials and outbound freight had an estimated 100-basis-point impact on margins during the quarter.
"We are seeing the impact on the key starting materials, solvents, as well as logistics-related freight outwards charges," said M V Narasimham, chief financial officer (CFO) of Dr Reddy's Laboratories, during the call.
The company's contract development and manufacturing organisation (CDMO) business, operated through its subsidiary Aurigene Pharmaceutical Services, crossed $100 million in sales over the last 12 months. The company also said its subsidiary had secured a long-term manufacturing and supply agreement with a leading global pharmaceutical company during the quarter.
Dr Reddy's to relaunch semaglutide in November, targets 6-7 million packs in H2
Dr Reddy's Laboratories expects to relaunch its semaglutide product in November after resolving issues related to scaling up production of the active pharmaceutical ingredient (API). November falls in the third quarter of FY27, in line with the timeline the company had indicated earlier.
"We are on track to resolve issues associated with the semaglutide API," Erez Israeli, chief executive officer of Dr Reddy's Laboratories, said during the company's earnings call, adding that the relaunch was likely in November.
The company expects to supply 6-7 million packs across 10 markets in the third and fourth quarters of FY27, with Canada accounting for the majority of supplies during the period. The management clarified that the product already has regulatory approval in Canada and that no additional marketing approval is required for the relaunch.
Dr Reddy's said it had initially sourced the product using its own API and a partner's formulation, while simultaneously qualifying alternative suppliers for both the API and formulation. When it encountered the scale-up issue in July, it switched to a partner's product to maintain its presence in the Indian market.
The management also said demand for injectable semaglutide was higher than for oral formulations, adding that more doctors were prescribing the product. The company did not provide a specific revenue forecast for the relaunch during the call.