Dr. Reddy's Q1 Earnings and Revenues Miss Estimates, Stock Down

Dr. Reddy’s shares lost 9.4% on Wednesday, likely because the dismal fiscal first-quarter results disappointed investors.

RDY’s Q1 Results in Detail

Dr. Reddy’s reported revenues under three segments — Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.

Global Generics revenues totaled INR 72 billion, down 5% year over year. The decrease was mainly due to lower North America generics sales, partly offset by broad-based growth across key markets supported by favorable foreign exchange movements.

Dr. Reddy’s launched six new products in North America during the reported quarter. However, revenues in the North America segment declined 35% year over year, largely due to lower lenalidomide sales.

As of June 30, 2026, a total of 79 generic filings were pending approval from the FDA, comprising 76 abbreviated new drug applications (ANDAs) and three new drug applications. Of these 76 ANDAs, 45 are Paragraph IV applications.

Dr. Reddy’s shares have lost 18.9% year to date compared with the industry’s 1.3% decline.

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PSAI revenues totaled INR 8.52 billion, representing a 4% year-over-year increase, largely due to momentum in RDY’s services business, aided by favorable currency fluctuations.

Revenues in the Others segment totaled INR 0.19 billion, down 88% year over year.

Gross margin declined 1,039 basis points year over year to 46.5% in the first quarter of fiscal 2027. This was mainly due to lower lenalidomide sales, price erosion in the North America and Europe Generics businesses, a previously disclosed semaglutide API related impact and higher solvent costs stemming from the Middle East crisis.

Research and development (R&D) expenses of $61 million were down 8% year over year due to lower development spending in biosimilars. R&D efforts continue to be focused on complex generics, including peptides and biosimilars.

Selling, general and administrative expenses totaled $304 million, up 12% year over year. The rise was primarily due to higher personnel costs, including increments, adverse forex movements, targeted investments in branded businesses and higher freight costs due to the Middle East crisis.

Key Updates From RDY

During the reported quarter, Dr. Reddy’s announced the launch of Obeda (oral semaglutide tablets) in India for the treatment of adults with type 2 diabetes (T2D) mellitus, expanding its GLP-1 portfolio following recent launches of generic semaglutide injections in India and Canada. The once-daily oral biosimilar is available in 3 mg, 7 mg and 14 mg strengths after receiving regulatory approval based on a phase III study involving 288 patients, which demonstrated non-inferior efficacy and a safety profile comparable to the reference oral semaglutide, with similar improvements in HbA1c, fasting and post-prandial glucose, weight loss and no detectable anti-drug antibodies.

Per RDY, Obeda is formulated using its in-house recombinant DNA-derived semaglutide API and is intended to improve glycemic control in adults with T2D alongside diet and exercise. The tablets are priced at Rs. 99, Rs. 135 and Rs. 225 for the 3 mg, 7 mg and 14 mg strengths, respectively. Dr. Reddy’s said the launch broadens treatment options for patients in India, where diabetes affects more than 101 million adults, while supporting reliable supply, affordability and long-term access to GLP-1 therapies.

Last month, Dr. Reddy’s announced the first-to-market launch of Bosutinib Tablets 400 mg, the generic equivalent of Bosulif, in the United States. The product, developed and manufactured by MSN Laboratories with Dr. Reddy’s holding exclusive U.S. marketing rights, is a first-to-file generic and is eligible for 180 days of market exclusivity for the 400 mg strength.

The launch expands Dr. Reddy’s oncology portfolio and aims to improve patient access to more affordable treatment options. According to IQVIA National Sales Perspectives data, the Bosulif 400 mg brand recorded approximately $253.8 million in U.S. sales during the 12 months ended April 2026.

RDY's Zacks Rank & Stocks to Consider

Dr. Reddy’s carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks in the biotech sector are Neurocrine Biosciences NBIX, Amarin Corporation AMRN and Liquidia Corporation LQDA, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, estimates for Neurocrine Biosciences’ 2026 earnings per share have risen from $9.15 to $9.44. Over the same period, EPS estimates for 2027 have increased from $10.23 to $10.79. NBIX shares have gained 21.8% year to date.

Neurocrine Biosciences’ earnings beat estimates in three of the trailing four quarters and missed in the remaining one, the average surprise being 9.08%.

The 2026 loss per share estimate for Amarin is currently pegged at 65 cents while the same for 2027 is currently pinned at 51 cents. AMRN shares have lost 1.8% year to date.

Amarin’s earnings beat estimates in three of the trailing four quarters and missed in the remaining one, the average surprise being 50.02%.

Over the past 60 days, estimates for Liquidia’s 2026 earnings per share have increased to $3.02 from $2.97. Over the same period, EPS estimates for 2027 have risen to $4.92 from $4.81. LQDA shares have soared 152.4% year to date.

Liquidia’s earnings beat estimates in three of the trailing four quarters and missed in the remaining one, the average surprise being 54.40%.

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