Dr. Reddy's Laboratories: 3 Key Takeaways for Long-Term Investors
Key Points
Semaglutide supply reloading will begin by November 2026.
Base business revenue grew double digits excluding North American Lenalidomide.
Trailing 12-month CDMO revenue exceeded $100 million.
- 10 stocks we like better than Dr. Reddy's Laboratories ›
On the earnings call for its 2027 fiscal second quarter, ended Sept. 30, held on Oct. 23, 2026, Dr. Reddy's (NYSE:RDY) announced that its underlying base business delivered double-digit growth. For long-term investors, the company's ability to expand core geographic markets provides stability while high-value generic launches clear regulatory hurdles. Three takeaways from management on the call highlight where the business is headed.
1. Semaglutide Supply Resumes Following API Scale-Up Resolution
Management resolved active pharmaceutical ingredient (API, the biologically active component in a drug) scale-up challenges for Semaglutide, a diabetes and weight-loss medication. The company plans to reload supplies across Canada, Latin America, and Africa by November of 2026.
The main issue was with our ability to scale up the API. This problem is resolved, and we shipped all the necessary API to our partner.
-- Erez Israeli, Chief Executive Officer
2. Core Base Growth Offsets Cancer Drug Revenue Drops
Consolidated revenue fell 1.5% year over year to $905 million due to reduced sales of Lenalidomide, a blood cancer medication. Strong demand in India and emerging markets cushioned the decline, helping sustain gross margins at 52.1%.
Excluding Lenalidomide in North America, the underlying base business maintained its growth momentum delivering double-digit growth.
-- Mannam Venkatanarasimham, Chief Financial Officer
3. Complex Generics Pipeline Drives Future Growth Opportunities
The company is expanding its specialty portfolio, advancing Abatacept, a biosimilar biologic medication for rheumatoid arthritis, toward a U.S. Food and Drug Administration target decision date in December 2026. Management is also scaling its CDMO segment (contract development and manufacturing organization, which produces drugs for other companies), reaching $100 million in trailing 12-month revenue.
We also remain focused on advancing Abatacept and other complex generics as they move toward the regulatory review process in the coming quarters.
-- Erez Israeli, Chief Executive Officer
Looking Ahead
Underlying performance across core geographies remains steady as brand acquisitions and supply chain efficiencies support operating margins. Dr. Reddy's leverages strong local distribution networks and expanding biosimilar capabilities to defend market share while watching raw material costs and cost discipline across operating units.
We remain committed to improving the health of our business through delivering consistent growth and sustainable margins. As we continue to strengthen our core business, we are also investing in future growth drivers: growth peptides, biosimilar, consumer health, and innovation.
-- Erez Israeli, Chief Executive Officer
Commercial launches in complex injectables and global expansion of key peptide formulations position the business to capture long-term market demand.
Our focus remains on progressing key products, such as Semaglutide, and driving operational efficiency and pursuing targeted inorganic opportunities to support long-term growth and shareholder value.
-- Erez Israeli, Chief Executive Officer
Should you buy stock in Dr. Reddy's Laboratories right now?
Before you buy stock in Dr. Reddy's Laboratories, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dr. Reddy's Laboratories wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $355,124!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,254!*
Now, it’s worth noting Stock Advisor’s total average return is 901% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 25, 2026.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
