DRREDDY Q3 2024-2025 Call Highlights: Record EBITDA, New Launches & Biosimilar Milestones!

Dr Reddy’s Laboratories Ltd., an integrated global pharmaceutical company, in its Q3 earnings call discussed a 16% growth in India despite weakness in cardiac and GI segments, while its European business grew 22%. The company discussed its biosimilar strategy, including Rituximab, denosumab, and abatacept, targeting December 2025 filing. A major focus was the company’s Semaglutide plans, with launches planned across multiple markets from 2026, supported by full manufacturing integration capabilities except for the delivery device. The company plans to grow its recently acquired Nicotine Replacement Therapy (NRT) portfolio while maintaining 20% plus EBITDA margins, and confirmed that overall SG&A expenses will remain around 28% of sales.

Dr Reddy’s reported mixed Q3 results, with net profit growing 2% to INR1,404 crore, missing analyst expectations, while revenue grew 14% to INR8,531 crore. The company achieved its highest-ever quarterly EBITDA of INR2,298 crores, though margins declined to 27.5%. Growth was primarily driven by the newly acquired Nicotine Replacement Therapy portfolio and strong European performance, up 143% year-over-year, while emerging markets and India grew by 12% and 14% respectively. However, the company faced challenges including increased SG&A expenses, up 19% year-over-year and price pressure in the US generics market. The company invested INR6.7 billion in R&D (8% of revenues) and made strategic progress with biosimilars, securing UK marketing authorization for rituximab and filing denosumab in both US and Europe.

Continue Reading: Discover the Vital Insights from Dr Reddy’s Laboratories Ltd.’s Earnings Call!

Financial/Operational Metrics:

• Total Revenue: INR8,531 crore, up 14% YoY.
• Net Profit: INR1,404 crore, up 2% YoY.
• Diluted EPS: INR16.97, up 2% YoY.
• EBITDA: INR2,298.2 crore, up 9% YoY.
• Gross Margin: 58.7%, up from 58.5% YoY.
• R&D Expenses: INR665.8 crore, up 20% YoY.

Outlook:

• NRT Business Integration: Full transition starting April 2025.
• R&D Spend Outlook: 8.5-9% of revenue for FY 2025.
• Future Growth Strategy: Focus on consumer healthcare, innovative products, and biosimilars.

 

Analyst Crossfire:

• India Business Performance & Biosimilars Strategy (Kunal Dhamesha – Macquarie): Despite overall growth, the cardiac and gastrointestinal segments underperformed. Gastro is expected to recover soon, while cardiovascular may take another quarter due to necessary adjustments. Denosumab was strategically licensed to facilitate the launch of abatacept, as both target the same segment. Approval in the U.S. is expected within 12 months and in Europe within 14-15 months (Erez Israeli – CEO).

 

• U.S. Business Performance & NRT Business Integration (Neha Manpuria – Bank of America): Decline in base business revenue was due to increased competition in specific products rather than a major shift. Growth in other products helped offset losses. Investments in NRT are continuing under an agreement with Haleon, with increased spending in specific areas. The real growth is expected post-integration, but investments will also reflect in SG&A costs over the next 12-14 months (Erez Israeli – CEO, M V Narasimham – CFO).

 

• Semaglutide Market Strategy & SG&A Discretionary Spend (Amey Chalke – JM Financial): Dr. Reddy’s expects limited competition at launch in Canada (January 2026) due to early filings. The company has been preparing for a decade, securing API supply and injector manufacturing capacity. Revlimid’s success allowed higher discretionary spending in R&D and CapEx, including NRT acquisition and Semaglutide investments. If required, SG&A expenses can be adjusted while maintaining 25% EBITDA margins (Erez Israeli – CEO).

 

• Abatacept Biosimilar Confidence & Lenalidomide Sales Outlook (Bino Pathiparampil – Elara Capital): Positive Phase 1 results and successful patient enrollment in Phase 3 give confidence in FDA approval. The company expects to submit in 2025. Volume restrictions on sales end in late 2025, after which pricing pressure will likely increase. The company anticipates similar performance until then (Erez Israeli – CEO).

 

• Oral Semaglutide Launch Timeline & European Market Growth (Saion Mukherjee – Nomura, Foram Parekh – Bank of Baroda): The oral formulation will launch 12-18 months after the injectable version. In some markets, this means a 2027 launch, while others may see it in 2028 due to patent constraints. The 22% YoY growth (excluding NRT) is sustainable due to new product launches, volume expansion, and entry into five additional markets (Erez Israeli – CEO).

 

• FDA Inspections & U.S. Approvals & Abatacept Launch Timing (Anubhav Agrawal – UBS): Dr. Reddy’s expects FDA inspections across five to six sites but has no pending regulatory queries. The company anticipates 15-20 new U.S. product approvals in addition to Iron Sucrose. The drug will be filed in December 2025, but due to existing patents, market entry is expected only by early 2028 (Erez Israeli – CEO).

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