Dr Reddy’s counts on biosimilars, weight-loss drug rollout as Revlimid US edge fades

DRL

• Dr. Reddy's faces declining US Revlimid sales, impacting quarterly revenue.
• Company plans launches of Semaglutide and biosimilars to offset losses.
• Q3FY26 net sales grew 4.4% YoY; EBITDA margin adjusted to 24.8%.

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Dr Reddy’s Laboratories Ltd is entering a transitional phase as its once-lucrative generic Revlimid revenue stream dries up, leaving the Indian pharmaceutical player to lean on a pipeline of complex generics and biosimilars to fill the void.

The Revlimid cliff

The company’s US sales are facing a significant reset. In an interview to Moneycontrol,  chief financial officer MV Narasimham, characterised the upcoming period as a temporary disruption.

“This anomaly is going to be within the next four quarters... till December 2026,” Narasimham said in a post-earnings interview on January 21. From January 1, investors should expect negligible sales from Lenalidomide (generic cancer drug Revlimid), he added.

The impact is already visible. In the December quarter, US revenues slipped by $35 million sequentially to $338 million, primarily due to lower Revlimid contributions and price erosion.

Analysts at Equirus Securities remain cautious, noting that while Q3 Revlimid revenues of over $80 million exceeded expectations, the company’s dependence on the product remains a point of concern.

"DRRD's earnings dependence on Revlimid remains high, but its ability to offset the decline through cost controls and scale-up of semaglutide is debatable," the Equirus report said.

All depends on execution of semaglutide and biosimilar launches

Dr Reddy's is pinning hopes on high-value launches, most notably the GLP-1 drug semaglutide. Narasimham confirmed that the company is "gearing up for the launch" in Canada, which is managed as part of its US generics business.

The Canada launch is anticipated between late February and May. There is no plant inspection required, and the product is expected to be substitutable, the management said during the earnings call.

Beyond weight-loss drugs, the company is advancing a robust biosimilar portfolio.

The company has filed a Biologics License Application (BLA) for the intravenous formulation with US approval expected by late calendar 2026.

Denosumab, another biosimilar, was launched in the EU, with a US launch likely in the second quarter of FY27 or later due to a CRL, while Rituximab US approval is delayed due to inspection needs, the product has already been launched in the EU.

Dr Reddy's is getting ready launch Ozempic (semaglutide) generic in India in March.

Narasimham said that the company is "ramping up the teams" to support these innovations, particularly in the domestic market.

Despite the headwinds in the US, the company delivered what Narasimham called a "resilient" performance in Q3.

Its net sales stood at Rs.8,727 crores ($971 million), a 4.4 percent year-over-year growth.

It EBITDA margin at 23.5 percent, but adjusted to 24.8 percent after excluding a one-time labour code provision of Rs120 crore.

The management expects underlying EBITDA margin to be around 24.8 percent to 25 percent after adjusting for one-time provisions.

As of December 31, 2025, the company had a net cash surplus at Rs. 3,069 crore.

While the base business in India and Russia remains strong — growing 19 percent and 50 percent, respectively, — the market's focus remains on how quickly Dr Reddy's can scale its complex pipeline to offset the $250 million quarterly revenue run rate in the post-Revlimid era.

At 11.22 am, Dr Reddy’s stock was trading at Rs 1,220.30 on the National Stock Exchange, up 5.25 percent from the previous close.