Dr. Reddy's Laboratories Limited RDY reported third-quarter fiscal 2025 earnings of 20 cents per American Depositary Share (ADS), which matched the Zacks Consensus Estimate. The company reported earnings of 19 cents per ADS in the year-ago quarter.
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Revenues grew 16% year over year to $977 million, which surpassed the Zacks Consensus Estimate of $875 million. The year-over-year improvement was primarily driven by growth in global generics revenues. The stock likely declined 6.2% on Thursday due to the company’s fiscal third-quarter results.
RDY’s Q3 Results in Detail
Dr. Reddy’s reported revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.
Global Generics revenues totaled INR 73.8 billion, up 17% year over year. The increase was primarily driven by revenues from the recently acquired Nicotine Replacement Therapy (NRT) portfolio, higher volumes and new product launches.
Dr. Reddy’s launched four new products in the United States during the reported quarter.
As of Dec. 31, 2024, cumulatively, 79 generic filings were pending approval from the FDA (75 abbreviated new drug applications [ANDAs] and four new drug applications). Of these 75 ANDAs, 44 were Para IVs.
Shares of Dr. Reddy’s have lost 7.4% in the past three months against the industry’s 12.1% growth.
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PSAI revenues amounted to INR 8.2 billion, up 5% from the year-ago level. The improvement was driven by momentum in base business volumes, revenues from new product launches and favorable forex, partially offset by adverse price variance.
Revenues in the Others segment totaled INR 1.6 billion, up 33% year over year.
Gross margin improved to 58.7% from 58.5% 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 20% year over year to $78 million, driven by ongoing development efforts across generics, biosimilars and novel oncology assets.
Selling, general and administrative expenses totaled $282 million, up 19% year over year. The increase was largely due to costs associated with the NRT business, investments in business growth and other initiatives, along with higher freight costs.
Key Pipeline Updates From RDY
During the quarter, Dr. Reddy’s signed a voluntary licensing agreement with Gilead Sciences GILD to manufacture and commercialize lenacapavir in India and other countries.
Gilead’s lenacapavir is indicated for the treatment of human immunodeficiency virus type 1 (HIV-1) infection in heavily treatment-experienced adults with multidrug-resistant HIV-1 infection, failing their current antiretroviral regimen due to resistance, intolerance, or safety considerations. Additionally, GILD’s lenacapavir is currently under investigation for the prevention of HIV (PrEP).
Dr. Reddy’s also reported encouraging initial data from the first eight patients in the phase I SWASTH study of ribrecabtagene autoleucel (DRL-1801) for relapsed / refractory multiple myeloma (MM) patients, marking this as India’s first study for a novel autologous BCMA directed CAR-T cell therapy. Dr. Reddy’s is currently preparing to begin phase II development of DRL-1801 for MM.
Dr. Reddy's Laboratories Ltd Price and Consensus
Dr. Reddy's Laboratories Ltd Price and Consensus
Dr. Reddy's Laboratories Ltd price-consensus-chart | Dr. Reddy's Laboratories Ltd Quote
Regulatory Updates
In the third quarter of fiscal 2025, Dr. Reddy’s partner, Alvotech, completed regulatory filing seeking approval for a generic version of Amgen’s Prolia and Xgeva (denosumab).
Dr. Reddy’s has launched BixiBat (elobixibat) in India, a first-in-class drug for chronic constipation. The company is the first to launch elobixibat in India. The drug works by inhibiting bile acid reabsorption and enhancing colonic motility, fluid secretion and bowel movements.
In November 2024, RDY launched a biosimilar of Coherus BioSciences’ CHRS Loqtorzi (toripalimab) in India under the brand name Zytorvi for the treatment of adults with recurrent or metastatic nasopharyngeal carcinoma, a rare form of head and neck cancer. Loqtorzi, a novel anti-PD-1 monoclonal antibody, is a new biological entity that has been developed by Coherus in collaboration with China-based Junshi Biosciences.
RDY’s Zacks Rank & Stock to Consider
Dr. Reddy’s currently carries a Zacks Rank #3 (Hold).
A better-ranked stock from the sector is Alnylam Pharmaceuticals ALNY, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 30 days, estimates for Alnylam Pharmaceuticals’ 2024 loss per share have remained constant at 39 cents. The estimate for 2025 earnings per share is currently pegged at 40 cents. In the past three months, shares of Alnylam Pharmaceuticals have lost 3.3%.
ALNY’s earnings beat estimates in three of the trailing four quarters and matched once, delivering an average surprise of 65.67%.
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