Dr Reddy's Laboratories Q1 2026 Earnings Call Highlights: Steady Revenue Growth Amidst US Market Challenges

Dr Reddy's Laboratories reported a 11% YoY increase in consolidated revenues to INR8,545 crores in Q1 2026. The biosimilar business gained momentum through a strategic collaboration, while the US generics business experienced softness due to price erosion. The company maintained a strong balance sheet with a net cash surplus of USD341 million.

Dr. Reddy's Laboratories, a prominent Indian pharmaceutical company, reported its financial results for the first quarter of the fiscal year 2026 (Q1FY26). The company saw a significant 11.37% year-over-year (YoY) increase in consolidated revenues, reaching Rs 8,545.2 crore. However, the net profit fell short of analyst estimates, with a profit of Rs 1,418 crore, up 1.26% compared to the same quarter last year (Q1FY25) [1].

Key highlights from the quarter include a strong performance in the branded assets segment, particularly the nicotine replacement therapy (NRT) business, which saw a 142% YoY revenue surge. This growth was driven by the acquisition of Haleon's global NRT business, which has exceeded expectations and contributed Rs 669 crore in sales during the quarter [2].

However, the company faced challenges in its North America market, where revenue fell by 11.3% due to pricing pressure and competition. This was offset by the strong performance of the European business, which benefited from the integration of the NRT portfolio. The company ended the quarter with a net cash surplus of Rs 2,922 crore [1].

Looking ahead, Dr. Reddy's plans to expand its newly acquired NRT portfolio into more countries once the integration is complete. The company also intends to launch biosimilars in the US and Europe on its own, signaling greater confidence in its own commercial capabilities [2].

In the broader pharmaceutical landscape, the small molecule drug discovery outsourcing market is expected to grow significantly, with a projected size of USD 13.43 billion by 2034. This growth is driven by the need for external expertise, cost efficiency, and faster time-to-market for novel drugs [3].

References:
[1] https://www.financialexpress.com/business/industry-dr-reddys-q1fy26-profit-below-estimates-at-1-26-revenue-up-11-4-3924290/
[2] https://www.moneycontrol.com/news/business/stocks/dr-reddy-s-prioritises-branded-assets-for-strategic-acquisitions-cfo-narasimham-13335332.html
[3] https://www.biospace.com/press-releases/small-molecule-drug-discovery-outsourcing-market-size-to-surpass-usd-13-43-billion-by-2034