Dr Reddy’s shares decline over 6% on subdued Q3 numbers; here is what impacted earnings and investor sentiment

At 10:20 am, the shares were trading at ₹1,230, falling 4.60% on BSE. On the 50-share NSE, the scrip was trading 4.54% lower at ₹1,230.80 apiece.

The drugmaker reported a 2% increase in consolidated profit after tax (PAT) for the quarter ending December 2024 (Q3) year-on-year to ₹1,413.3 crore. Last year's third quarter PAT was ₹1,378.9 crore.

Revenue of the company surged 16% year-on-year to ₹8,359 crore. However, operational challenges rose as pricing pressure in the US market and the fall in Revlimid revenue took a toll on margins, with the EBITDA margin shrinking to 27.5% from 29.3% a year ago.

The company remained concerned over declining revenue from Revlimid, which is a cancer drug that has been a strong growth driver for Dr Reddy’s in recent years.

Revlimid’s revenue contribution has slowly started declining, with its patent expiry set for January 2026. This means Dr Reddy's will need to find new revenue streams soon. Another factor that led to today's decline was the drug's shrinking margins.

"We delivered double-digit growth aided by our newly acquired NRT business, new launches, and improved operational efficiencies. We remain committed to addressing patient needs by advancing healthcare through access, affordability, and innovation," said G V Prasad, co-chairman and managing director, commenting on the results.

Revenue from North America, Dr Reddy's biggest geography, rose 1% to ₹3,380 crore, as volume growth on the back of new launches was offset by lower prices.

"The sequential decline was largely on account of lower sales of certain products, including Lenalidomide," the company said.

Lenalidomide, a major contributor to Dr Reddy's North American sales since 2022, is a generic version of Bristol-Myers Squibb's popular cancer treatment drug Revlimid.