Will Natco, Dr. Reddy's bet on weight-loss generic pay off?

Natco Pharma and Dr. Reddy's Laboratories' strategic pivot aims to stabilize their growth

- Jessica Jani

In the face of looming revenue decline from blood cancer medication Revlimid, Indian pharma companies Natco Pharma and Dr. Reddy's Laboratories are shifting their focus to a promising new frontier: a weight loss drug modeled after Ozempic. This strategic pivot aims to stabilize their growth and set them on a path toward recovery in an ever-evolving market.

Since last week, Natco Pharma's shares have plunged over 30%, after the company posted weak Q3 earnings, on account of the absence of sales of Revlimid during the quarter. The company reported a sharp 39% year-on-year decline in its revenue (excluding other income) to ₹464 crore in Q3FY25. While the company said that this was a one-off event due to its volume quote for Revlimid ending in September, some investors were notably upset in the company's earnings call.

"You have to live with the volatility, that's the nature of the business," Rajeev Nannapaneni, the company's vice-chairman and chief executive officer, told investors during the call.

Indian pharma companies like Dr. Reddy's, Natco, Cipla, Sun Pharma, Zydus and Aurobindo Pharma have cashed in on generic versions of the $8 billion blockbuster drug distributed in restricted quantities in the US since March 2022, per agreements with innovator Celgene's parent company Bristol Myers Squibb.