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Dr. Reddy's Laboratories Limited RDY reported second-quarter fiscal 2025 earnings of 18 cents per American Depositary Share (ADS), which missed the Zacks Consensus Estimate of 19 cents per ADS. The company reported earnings of 21 cents per ADS in the year-ago quarter.
The bottom line was hit by a one-time acquisition cost and impairment charge on non-current assets.
Revenues grew 17% year over year to $957 million, which outpaced the Zacks Consensus Estimate of $879 million. The year-over-year improvement was primarily driven by growth in global generics revenues.
Shares of Dr. Reddy’s have risen 5% year to date compared with the industry’s 18.4% growth.
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RDY’s Q2 Results in Detail
Dr. Reddy’s reports revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.
Global Generics revenues totaled INR 71.6 billion, up 17% year over year. The increase was primarily driven by improved sales volumes and new product launches.
Dr. Reddy’s launched four new products in the United States during the reported quarter.
As of Sept. 30, 2024, cumulatively, 80 generic filings were pending approval from the FDA (75 abbreviated new drug applications [ANDAs] and five new drug applications). Of these 75 ANDAs, 44 were Para IVs.
PSAI revenues amounted to INR 8,4 billion, up 20% from the year-ago level. The improvement was driven by momentum in base business volumes, growth in services business and revenues from new products.
Revenues in the Others segment totaled INR 0.2 billion, down 74% year overyear.
Gross margin improved to 59.6% from 58.7% in the year-ago quarter due to a favorable product mix and overhead leverage. However, the uptick was partially offset by price erosion in generics markets.
Research and development expenses jumped 33% year over year to $87 million, driven by ongoing development efforts across generics, biosimilars and novel oncology assets.
Selling, general and administrative expenses totaled $275 million, up 22% year over year, primarily owing to investments in business growth and other initiatives. The company also incurred a one-time acquisition related cost on the acquisition of Nicotine Replacement Therapy (‘NRT’) portfolio.
Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise
Dr. Reddy's Laboratories Ltd price-consensus-eps-surprise-chart | Dr. Reddy's Laboratories Ltd Quote
Key Pipeline Updates From RDY
Dr. Reddy’s acquired an NRT portfolio outside the United States and paid GBP 458 million in cash consideration pursuant to an agreement with Haleon plc.