Profit Miss and Patent Pains: Can Dr. Reddy’s Hold Ground in Lenalidomide’s Turf War?

Dr. Reddy’s Laboratories reported Q1 FY26 results that reflect resilience across India and emerging markets, but mounting pricing pressure in the US generics segment weighed on overall profitability.

Key financial takeaways:

- Consolidated revenue from operations stood at Rs 85.72 billion, slightly below IBES estimates of Rs 86.98 billion

- Net profit came in at Rs 14.18 billion, missing the Rs 14.94 billion consensus forecast

- EBITDA margins improved sequentially, aided by stronger operating leverage in India and emerging markets

North America drag:

- Revenue decline in the US was driven by intensified price erosion in key products

- Lenalidomide, a major revenue contributor, is expected to face further pricing pressure due to increased competition

- Despite gRevlimid sales, older molecules continue to erode margins

Offsetting strengths:

- India and emerging markets posted double-digit growth, supported by chronic therapies and new launches

- Europe showed steady gains in dermatology and respiratory segments

- R&D intensity remained elevated at 7.5 percent of sales, reflecting continued investment in complex generics and biosimilars

Sources: Moneycontrol, Economic Times, Business Standard, Dr. Reddy’s official filings, Bloomberg, Reuters

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