Add Dr. Reddy’s Laboratories Ltd for the Target Rs. 1,335 by Choice Institutional Equities
Key Conference Call Highlights
North America:
* Revenue declined sharply due to lower Lenalidomide sales and onetime shelf-stock adjustment of INR 4530 Mn related to Lenalidomide.
* Launched 25 products and filed for 15 ANDAs in FY26.
* BLA for abatacept biosimilar (IV) was accepted for review by USFDA, strengthening biosimilar pipeline visibility.
* Management expects North America business excluding Lenalidomide to deliver double-digit growth in FY27, supported by new launches and stable market share trends.
* The future growth strategy in North America will increasingly focus on biosimilars, consumer healthcare and select 505(b)(2) opportunities rather than only traditional generics.
India:
* India business continued to deliver strong double-digit growth led by innovation portfolio, price hikes, higher volumes and acquired brands.
* Semaglutide launch under the brand ‘Obeda’ witnessed encouraging traction in India; the management indicated market share has already crossed 10% on a standalone basis.
* Portfolio rationalisation continued with divestment of two non-core brands and discontinuation of select CAR-T R&D programs.
Europe:
* Europe business growth was largely supported by the acquired nicotine replacement therapy (NRT) consumer healthcare portfolio.
* NRT business integration has reached 95% of acquired business value, supporting operational synergies.
* The normalised sustainable growth rate for NRT is expected to be in high single digit to low double digits, going forward.
Emerging Markets:
* Revenue increase led by new launches, volume growth and favourable forex.
* Management expects Semaglutide to become an important growth driver across several emerging markets as approvals are received over the next 12 months.
* The company plans to launch Semaglutide in more than 50 markets in CY2026 and over 80 markets within the next 12 months through both, direct and partner-led, models.
Outlook:
* Sustaining double-digit base business growth (exLenalidomide).
* Reiterated its aspiration of moving EBITDA margin closer to 25% through new launches, operational efficiencies and portfolio diversification.
* Management continued to emphasize Semaglutide and Abatacept as the key long-term growth drivers for the company.
* The company expects Semaglutide sales of around 10-12 Mn units in FY27, although delays in Brazil approvals may shift a part of the opportunity into FY28.
* R&D spending is forecasted to remain in the range of 7-8% of revenues as major investments in key biosimilar programs have already been completed.
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SEBI Registration no.: INZ 000160131
