Dr. Reddy's Laboratories Q4 FY25 earnings showed positive momentum amid analysts' expectations of muted Q4FY25 earnings. The management attributed this growth mainly to new product launches, the NRT acquisition, and improved segment-wise performance across key markets, particularly in Europe and North America.
CEO Erez Israeli has projected double-digit growth for FY26, primarily on the back of semaglutide launches and pipeline progress. The company is not hesitant to restart manufacturing in the US, combined with strategic acquisitions, while effectively addressing potential tariff risks.
Previous months saw the company shutting down its Shreveport manufacturing unit in Louisiana due to ineffectiveness in serving the needs for products and related activities, but this is not linked with the tariff uncertainties. “We will love to make products in the United States, but not in that specific site,” he said.
He emphasised 'services being the number one priority' for Dr Reddy's in these uncertain times. “The main concern is a potential disruption of supply… most of the activities that we are doing now are working closely with the customers and creating the relevant inventory, service, orders and everything that allows us to give good service.” “Service is our number one priority”, he elaborated.
The company hopes to continue growth on an improved basis, even in the face of the loss of exclusivity for cancer drug Revlimid.
For the quarter-ended March of FY 2025, the pharma has reported a revenue increase of 20 percent YoY to Rs 8,506 crores ($996M), with a 12% increase excluding NRT. EBITDA grew 32 percent to Rs 2,475 crores, with a 29.1 percent margin, despite a gross margin dip to 55.6 percent due to one-time costs.
Net profit increased 22 percent to Rs 1,594 crores, aided by a lower tax rate and forex gains. R&D spending of Rs 726 crores targeted complex generics and biosimilars.
Free cash flow was Rs 1,110 crores in Q4 and Rs 1,332 crores for FY25 pre-acquisition.
The Board has proposed Rs 8 per share dividend (800 percent of face value).
Across key markets, its performance was as follows:
Emerging Markets: Revenue grew 16 percent YoY with 26 new launches in Q4 (85 for FY25). Russia saw 27 percent YoY growth in constant currency. Full-year revenue up 13percent.
Across its India business, revenue rose 16 percent YoY to Rs 1,305 crores, with 6 percent growth excluding vaccines. Full-year revenue up 16 percent to Rs 5,373 crores, ranking 10th in India per IQVIA.
North America Generics: Revenue up 7 percent YoY driven by higher volumes, seven new product launches, and 18 for FY25. Full-year revenue rose 10 percent.
Europe Generics: Revenue surged 142 percent YoY with 29 percent growth excluding NRT. Ten new products launched in Q4, totaling 39 for FY25. Full-year revenue up 73 percent.
PSAI: Revenue increased 13 percent YoY with new API launches and CDMO growth. Q4 saw 52 DMF filings (111 for FY25). Full-year revenue up 12 percent.
Research and development measures form 8.5 percent of total revenue, and the last quarter saw focus on GLP-1 generics, biosimilars, and oncology. Biosimilar partnerships included Daratumumab, ustekinumab, and golimumab, with a Denosumab filing accepted by the U.S. FDA. NRT integration advanced, with the UK completed and Nordics underway. New launches, like an RSV drug with Sanofi, are in the pipeline with Rituximab, Denosumab, and Abatacept expected to be launched in the US starting fiscal 2027-28.
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