Dr. Reddy's Laboratories: 3 Key Takeaways for Long-Term Investors

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

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