Dr. Reddy's Laboratories Limited Q1 FY2026 earnings call

• Double-digit revenue growth and EBITDA margin of 26.7% achieved. - Consumer health care business contributed to top line momentum. - Biosimilar collaboration with Alvotech for pembrolizumab biosimilar. - Integration of NRT business progressing with plans to onboard additional markets. - USFDA conducted inspections with Form 483 observations at various facilities. - CDP rating elevated to A in climate category, retaining leadership in Water and Supplier Engagement. - Various business segments had specific performance highlights including North America, Europe, Emerging Markets, India, and PSAI.

Consolidated revenues for Q1 FY '26 stood at INR 8,545 crores (USD 997 million), a 11% year-over-year growth and flat sequentially. Global Generics had a gross margin of 60.9%. PSAI revenue was $95 million, with 4% year-over-year growth and 14% sequential decline, and a gross margin of 13.2%. North American business generated revenue of $400 million, a 17% Y-o-Y decline and 4% Q-o-Q decrease. European generic business delivered revenue of [131 million], a 124% Y-o-Y growth and 6% Q-o-Q decline. Emerging market business reported INR 1,404 crores, 10% Y-o-Y growth and flat sequentially. India business had revenue of INR 1,471 crore, 11% Y-o-Y growth and 13% Q-o-Q growth.

• Expect R&D investments to be in the range of 7% to 7.5% of sales for the full fiscal. - Base business in U.S. expected to be flat to single-digit growth. - Semaglutide launch expected between end of October to beginning of November 2025. - Capacity expansion for semaglutide with partner, expecting 10-12 million pens in FY '26 and '27. - Anticipates VAI inspection for Srikakulam facility issues to be addressable.

• Price erosion in generic segment, particularly lenalidomide. - Regulatory risks from USFDA inspections with Form 483 observations. - Uncertainty around Delhi High Court patent challenge impact on semaglutide launch in India.

Q: On the U.S. based business performance Q-on-Q and FY '26 outlook?

A: Base business in U.S. decreased, primarily due to timing, expected flat to single-digit growth.

Q: On semaglutide launches in ROW nonregulated market?

A: Prioritizing Canada launch, with other markets to launch during calendar '26.

Q: On lenalidomide pricing pressure and future trajectory?

A: Expect similar magnitude of pricing and quantities, with sharp decline in subsequent quarters.

Q: On semaglutide capacity expansion at Vizag?

A: Capacity for FY '27 will come from FY '28 onward, planning 12 million pens in FY '27 and 10 million in calendar '26.

Q: On biosimilar abatacept Phase III trials?

A: Readout in November '25, planning BLA submission for December '26 or January '27 launch.