- Dr. Reddy's Laboratories reported a 69% decline in consolidated net profit to ₹443 crore for Q1, impacted by inventory costs from semaglutide supply disruptions.
- The company made a provision of ₹240 crore for inventory and associated costs due to the semaglutide supply issues.
- Shares of Dr. Reddy's closed 2.16% lower at ₹1,179.90 on the NSE following the profit announcement.
- Revenue from North America, the company's largest market, declined 35.3% to ₹2,205 crore during the quarter.
- Earlier in July, Dr. Reddy's announced a semaglutide supply disruption due to an impurity issue in the active pharmaceutical ingredient.
- In the corresponding quarter of the previous fiscal, Dr. Reddy's had posted a consolidated net profit of ₹1,418 crore.
- Total revenue from operations declined 5.6% to ₹8,070.5 crore during the April-June quarter.
- The EBITDA fell 60.4% to ₹861 crore, with the EBITDA margin contracting to 10.6% from 25.3% a year earlier.
Dr. Reddy's Laboratories faced a challenging first quarter, with a 69% year-on-year decline in consolidated net profit to ₹443 crore, primarily due to ₹240 crore in provisions for inventory costs linked to semaglutide supply disruptions. The company reported a 5.6% drop in revenue from operations, totaling ₹8,070.5 crore, down from ₹8,545.2 crore in the same period last year.15
The North American market, which is Dr. Reddy's largest, saw a significant 35.3% decline in revenue, amounting to ₹2,205 crore. This downturn was attributed to pricing pressures and increased competition in the U.S. market. The company had previously announced that supplies of its generic semaglutide would remain unavailable in India and face disruptions in Canada until at least late October due to an impurity issue in the active pharmaceutical ingredient (API).
Dr. Reddy's co-chairman and managing director, G V Prasad, stated, “Our Q1FY27 performance reflected the expected transition beyond lenalidomide revenues, along with an unexpected impact related to semaglutide active pharmaceutical ingredient (API).” The company’s shares closed 2.16% lower at ₹1,179.90 on the NSE, reflecting broader selling pressure in the pharmaceutical sector amid concerns over the long-term outlook for Indian drug makers with significant exposure to the U.S. market.3
The EBITDA also fell sharply, down 60.4% to ₹861 crore, with the EBITDA margin contracting to 10.6% from 25.3% a year earlier, indicating the financial strain the company is currently facing.8
“The company made a ₹240 crore provision for semaglutide inventory and expects supply disruptions until at least late October. Co-chairman G V Prasad said the underlying base business delivered healthy double-digit growth across all key geographies despite the impact from lenalidomide and semaglutide.”
