DRL's US pain deepens; launches offer relief

FY26 estimates cut, but analysts see long-term tailwinds from biosimilars

- RAM PRASAD SAHU

The July-September quarter of 2025-26 (FY26) saw pharmaceutical major Dr Reddy’s Laboratories (DRL) miss most brokerage estimates, with weak performance in the North American market dragging down consolidated results.

With price erosion in North America expected to continue in the near term, several brokerages have cut their earnings estimates for the stock, though some of the sales loss could be offset by drug launches. While DRL stock has moved in line with the Nifty Pharma index — down 1 per cent over the past year — it has underperformed the Nifty, which gained 7.4 percent in the same period.

For the quarter, consolidated sales grew 10 percent year-on-year (¥-0-Y). The European business surged 139 percent Y-0-Y, driven by the acquired nicotine replacement therapy portfolio integrated into operations from the third quarter of 2024-25 (FY25). The India business rose 13 per cent Yo-Y, supported by launches, improved pricing, and higher volumes. The Rest of World segment registered 14 per cent Yo-Y growth.