Dr. Reddy's Laboratories Limited Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Fiscal year 2025 had record high revenue exceeding USD 3.8 billion and EBITDA over USD 1 billion. Q4 2025 consolidated revenues were INR 8,506 crores (USD 996 million), 20% YOY and 2% sequential growth. Full year revenues were INR 32,554 crores (USD 3.8 billion), 17% growth.
• Business Highlights: Biosimilar strategy progress with partnerships for daratumumab and ustekinumab/golimumab; integration of NRT business ongoing; divestment of Shreveport Manufacturing Facility; API facility in Bollaram received VAI status; sustainability initiatives recognized with EcoVadis improved to 73%.
• Segment Specifics: North America Generic had 7 new product launches in Q4 2025; European Generics launched 10 new products in Q4 2025; Emerging Market Generics launched 26 new products in Q4 2025; India business launched 23 brands in FY 2025; PSAI filed 111 DMFs in FY 2025.

Segment Performance

• Global Generics:
  • Q4 2025: North America Generic generated revenue of $418 million, with 7% year-over-year and 4% sequential growth; European Generics had revenues of EUR 140 million in Q4, 142% year-over-year and 4% sequential growth; Emerging Market Generics had INR 1,398 crores in Q4, 16% year-over-year and -20% sequential decline; India business had INR 1,305 crores in Q4, 16% year-over-year and -3% sequential decline. Full year 2025: North America Generic revenue was USD 1,727 million (10% growth); European Generics revenue was EUR 395 million (73% growth); Emerging Market Generics revenue was INR 5,477 crore (13% growth); India business revenue was INR 5,373 crores (16% growth). Gross margin for Global Generics was 59.3% in Q4 2025 and 62% for full year 2025.
• PSAI:
  • Q4 2025: Revenues of USD 112 million, 13% year-over-year and 15% sequential growth. Full year 2025: Revenues of USD 401 million, 12% growth. Gross margin for PSAI was 26.3% in Q4 2025 and 27.1% for full year 2025.

Guidance

• FY 2026 double-digit revenue growth is possible while maintaining margins.
• Expect continued growth in core businesses, process in consumer healthcare, innovative therapies, and biosimilars.
• Leveraging commercial footprint and exploring value-accretive acquisitions/partnerships.
• Semaglutide and biosimilars pipeline expected to contribute to growth.
• Revlimid sales likely to be managed to avoid price shelf adjustments before its exclusivity end in January 2026.

Risks

• Tariffs: Uncertainty around potential tariffs on generics and APIs, impact on supply chain and pricing.
• Revlimid Cliff: Potential decline in sales and margin impact once Revlimid exclusivity ends, though mitigation plans in place with new products and partnerships.

Question and Answer

Q: What is the sense on the extent of tariff on generic and API, and mitigation factors if tariff implemented given no U.S. manufacturing?

A: Erez Israeli said they are preparing for scenarios, working with customers on supply sustainability, waiting for formal communication on tariffs, and not actively building U.S. footprint but open to opportunities if right asset comes.

Q: On gross margin Q-o-Q change, provide color on operating leverage?

A: Unknown Executive said one-off costs like severance from divested Freeport plant and lower out-licensing income impacted gross margin, expecting it to be one-off and return to normal.

Q: Update on semaglutide and abatacept products?

A: Erez Israeli said semaglutide planning to launch in 2026 in markets IP allows; abatacept in Phase III, planning to submit by end of 2025.

Q: On Revlimid price erosion and FY 2026 growth?

A: Erez Israeli said there is price erosion and increase in quantity, FY 2026 double-digit growth possible, and margins expected to settle around 25% post Revlimid cliff.