Company Overview: Dr. Reddy’s Laboratories Ltd
Established in 1984 and headquartered in Hyderabad, Dr. Reddy’s Laboratories Ltd (NSE: DRREDDY) is one of India’s top pharmaceutical giants. With a global footprint spanning over 60 countries, the company operates across three major segments — Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary/Biosimilar Products.
Dr. Reddy’s portfolio includes over 200 medications, 60 active pharmaceutical ingredients (APIs), and a growing pipeline of biosimilars and complex generics. Key therapeutic areas include oncology, diabetes, cardiology, dermatology, and gastroenterology.
📊 Q1 FY26 Results: Solid Revenue, Modest Profit, U.S. Pressure Lingers
Quarter ending June 2025 delivered record-breaking revenue but marginal profit growth for Dr. Reddy’s:
| Particulars | Q1 FY26 | Q1 FY25 | YoY Change |
|---|---|---|---|
| Revenue | ₹8,545 Cr | ₹7,673 Cr | ▲ 11.4% |
| Net Profit | ₹1,418 Cr | ₹1,392 Cr | ▲ 2% |
| EPS | ₹84.98 | ₹82.25 | ▲ 3.3% |
🔹 Revenue was fueled by growth across India, Europe, and emerging markets.
🔹 However, North American sales dipped by 11% YoY, largely due to price erosion in key products like Lenalidomide.
🔹 Despite revenue growth, profit missed analysts’ estimates due to higher input costs and continued pricing pressure in the U.S. generic space.
🌍 Regional Revenue Breakdown
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India: ₹1,237 Cr (▲ 11% YoY) – sustained demand in chronic therapies.
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North America: ₹3,412 Cr (▼ 11% YoY) – price pressure & loss of exclusivity.
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Europe: ₹1,274 Cr (▲ 142% YoY) – strong volume growth from new launches.
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Emerging Markets: ₹1,639 Cr (▲ 18% YoY) – solid performance in Russia & Brazil.
💡 Europe became the highlight this quarter, marking triple-digit growth due to increased penetration and better pricing dynamics.
🧪 Strategic Leap: Biosimilar Keytruda with Alvotech
In a game-changing move, Dr. Reddy’s partnered with Iceland-based Alvotech to co-develop a biosimilar of Keytruda (pembrolizumab), one of the world’s highest-selling oncology drugs (US$29.5 billion revenue in 2024).
🔹 Dr. Reddy’s will handle development, manufacturing, and commercialization in key markets.
🔹 This expands the company’s footprint in the high-growth biosimilars segment, especially in oncology.
🔹 Investors welcomed this deal—stock surged over 4% intraday on announcement day.
🔍 This is Dr. Reddy’s 5th biosimilar in the pipeline, following rituximab, bevacizumab, and trastuzumab.
🚨 Quality Issues: Omeprazole Recall in U.S.
A recent Class II recall of 1,476 bottles of omeprazole (used for acid reflux) was issued in the U.S. due to a manufacturing deviation.
🔸 The recall is limited and non-severe, but reflects the ongoing FDA scrutiny that Indian pharma firms face.
🔸 The company is working to strengthen compliance protocols and remediate plant-level risks.
📈 Stock Market Performance: Eyes on ₹1,325 Breakout
As of July 26, 2025, Dr. Reddy’s stock trades at ₹1,277.10, up 8% in the past month. Despite earnings volatility, the long-term chart is forming a symmetrical triangle breakout pattern.
Technical Indicators:
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RSI: 58 – Neutral zone; room for upward move.
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MACD: Bullish crossover developing.
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Resistance: ₹1,325
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Support: ₹1,240 / ₹1,195
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50-DMA: ₹1,256
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200-DMA: ₹1,202
📉 The stock remains ~10% below its 52-week high of ₹1,420.20 (Aug 2024). A decisive breakout above ₹1,325 may trigger fresh buying.
📊 Valuation Snapshot
| Metric | Value |
|---|---|
| Market Cap | ₹106+ Cr |
| EPS (TTM) | ₹68.45 |
| P/E Ratio | ~18.8x |
| Dividend Yield | 0.63% |
| Book Value | ₹385 |
| ROCE | 21.2% |
💬 Analysts from Nuvama and Motilal Oswal maintain a “Buy” rating with a target price of ₹1,486, suggesting a potential upside of ~19% from current levels.
🛍️ What This Means for Retail Traders
✅ Long-term investment potential remains solid, especially with biosimilar exposure expanding in regulated markets.
✅ Q1 underperformance offers an opportunity to accumulate around ₹1,250–₹1,270 levels.
✅ With multiple pipeline products, healthy cash flows, and a lean balance sheet, Dr. Reddy’s remains one of the safest bets in Indian pharma.
⚠️ Watchlist triggers:
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FDA compliance trends.
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U.S. pricing stability.
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Progress in Keytruda biosimilar clinical trials.
📌 Conclusion: Growth Steady, Biosimilars Are the X-Factor
Dr. Reddy’s Laboratories continues to navigate through headwinds in the U.S. but remains focused on innovation, biosimilar expansion, and global market penetration. While Q1 FY26 saw muted bottom-line growth, its strategic roadmap, combined with robust execution, signals long-term value for investors.
📢 Did You Hold Dr. Reddy’s Before the Biosimilar Deal?
📌 Stay tuned for next week’s Pharma Power Picks. Bookmark our blog now!
📉 Stock Market Disclaimer
Disclaimer: This post is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy/sell any stock or share. Investing in the stock market involves risk. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial advisor before making investment decisions.
