Dr Reddy's Lab shares jump 4%, emerges top Nifty gainer on biosimilar deal with Alvotech

HSBC upgrades Dr Reddy's citing Semaglutide potential

Shares of Dr. Reddy’s Laboratories surged 4 percent to Rs 1,303 on June 5, making it one of the top gainers on the Nifty 50. The rally followed the company’s announcement of a strategic collaboration with Alvotech to co-develop, manufacture, and commercialize a biosimilar version of Keytruda (pembrolizumab) for global markets.

Keytruda, a blockbuster immunotherapy drug used in the treatment of various cancers, generated global sales of $29.5 billion in 2024. The collaboration brings together the biosimilar expertise of both companies and is expected to accelerate development timelines while broadening the global reach of the product.

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As per the agreement, Dr. Reddy’s and Alvotech will jointly handle development, manufacturing, and commercialisation, with shared responsibilities and costs. Barring certain exceptions, both companies will also have the right to market the biosimilar in international markets.

Adding to the stock’s momentum, HSBC upgraded Dr. Reddy’s to a ‘Buy’ from ‘Hold’, and raised its target price to Rs 1,445, up from Rs 1,235. In its note, HSBC said Semaglutide—a drug used for type-2 diabetes—is expected to significantly boost the company’s Earnings Per Share (EPS) within a year of its launch in key regions.

The brokerage sees Canada, Brazil, and India as key target markets for Semaglutide, where demand remains strong but supply is currently constrained. Unlike typical generics, HSBC does not expect prices for Semaglutide to fall sharply due to sustained demand. It estimates that the Semaglutide opportunity could nearly triple in these markets over the next two to four years.

In the past month, Dr. Reddy’s stock has gained 9 percent, significantly outperforming the 1 percent rise in the benchmark Nifty 50.

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