Dr. Reddy's Laboratories expects earnings to remain under pressure until FY27, targeting a recovery by FY28 through new high-value product launches. The company has scheduled a November 2026 relaunch for its generic semaglutide and awaits a US regulatory decision on its abatacept biosimilar in December 2026. These strategic pivots aim to compensate for declining revenue from legacy generic products and a slow API business.
Dr. Reddy's Laboratories is entering a transitional phase as it works to replace declining revenue from its older generic portfolio. The company has stated that it expects an earnings dip to continue through the current fiscal year and the next, with a structural recovery anticipated by FY28. This outlook comes as the company navigates a soft market for its Active Pharmaceutical Ingredients (API) business and falling sales from products like Revlimid in the North American market, a challenge common among Indian pharmaceutical companies facing patent expiries and generic competition.
The company’s growth plan hinges on a shift toward complex therapeutics and biosimilars. A significant milestone is the planned relaunch of its generic semaglutide in November 2026. After addressing supply chain issues related to scaling up its manufacturing, the company aims to distribute between six and seven million pens in the current cycle. Long-term, the company sees an addressable market of up to 15 million pens annually. While the initial focus is on Canada and other international markets, successful volume scaling will be the key factor for revenue growth.
Beyond semaglutide, the company is intensifying its push into the US biosimilar market. A regulatory update regarding its abatacept biosimilar, which is used to treat arthritis, is expected in December 2026. While gaining approval is only the first step, integrating these complex drugs into hospital and pharmacy formulary lists typically takes several quarters. Management considers this a long-term engine for growth, further supported by its recent approvals, including a rituximab biosimilar for blood cancer and a nivolumab biosimilar for the domestic market.
The company’s strategy to insulate itself from the intense pricing pressure found in standard generic medicines relies on a pipeline of 80 pending filings in North America. Notably, 27 of these are first-to-file opportunities, which could provide early-mover advantages if approved. For investors, the next phase of the company's performance will depend on the execution of these launches. Key monitorables include the successful supply chain ramp-up for semaglutide, the timely regulatory approvals for its biosimilar pipeline, and the company's ability to maintain profit margins while investing heavily in these complex product categories.