Dr. Reddy's Laboratories reported second quarter 2027 financial results that missed analyst estimates for both revenue and earnings, primarily due to a sharp decline in its U.S. generics business. Consolidated revenue reached $905 million, a 1.5% year-over-year decline, while diluted EPS fell to $0.12. The performance was weighed down by a 23% slump in North American sales as contributions from high-margin generic lenalidomide (Revlimid) normalized. However, the company maintained an EBITDA margin above 20% and saw robust growth in branded markets, particularly in India and Emerging Markets.
Key Highlights
- North America revenue declined 23% YoY to ₹24.9 billion ($260 million), primarily due to normalization of generic Revlimid sales and base business pricing pressure.
- India segment revenue grew 17% YoY to ₹18.5 billion, driven by new brand launches, volume growth, and contributions from recently acquired portfolios.
- Emerging Markets revenue increased 24% YoY to ₹20.6 billion, led by strong performance in Russia (up 15%) and new product launches across other markets.
- Gross margin contracted 254 basis points YoY to 52.1%, reflecting the shift in the U.S. product mix toward lower-margin generic portfolios.
- The company generated free cash flow of ₹1.7 billion during the quarter and maintained a net cash surplus of ₹25.0 billion.