The sharp decline in North America generics revenue, driven by lenalidomide erosion, is a structural headwind that base business growth in India and Emerging Markets has not fully offset. Monitor the next quarter for stabilization in North America and any further semaglutide-related charges, as well as the uptake of new biosimilar launches.
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Executive Summary
Dr. Reddy's reported Q2 FY2027 consolidated revenues of ₹86.7 billion, a 1.5% YoY decline, with profit after tax attributable to equity holders falling 36% YoY to ₹9.25 billion. The decline was primarily driven by lower lenalidomide sales in North America, partially offset by double-digit growth in India and Emerging Markets. Gross margin contracted 254 bps YoY to 52.1%, and EBITDA margin fell to 20.6% from 26.7% a year ago.
Key Facts
- Q2FY27 consolidated revenues declined 1.5% YoY to ₹86.7 billion; H1FY27 revenues declined 3.5% YoY to ₹167.4 billion.
- Profit after tax attributable to equity holders fell 36% YoY to ₹9.25 billion in Q2FY27; H1FY27 profit fell 52% YoY to ₹13.69 billion.
- North America revenues declined 23% YoY in Q2FY27 to ₹24.9 billion, largely due to lower lenalidomide sales.
- Gross margin contracted to 52.1% from 54.7% YoY; EBITDA margin fell to 20.6% from 26.7% YoY.
- India and Emerging Markets showed strong growth of 17% and 24% YoY respectively, but did not offset the North America decline.
- The company recorded a ₹710 million provision for semaglutide product returns in Canada and a ₹2.4 billion provision for semaglutide API-related inventory costs in Q1FY27.
Financial Impact
Revenue declined 1.5% YoY to ₹86.7 billion; profit after tax fell 36% YoY to ₹9.25 billion. Gross margin contracted 254 bps to 52.1%.
Risk Factors
- Continued erosion of lenalidomide revenues in North America
- Semaglutide quality issues leading to further recalls or provisions
- USFDA Form 483 observations at multiple facilities could delay future approvals
- Geo-political risks in Russia/Ukraine and Middle East impacting supply chain and demand
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 3 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 6-K Filing (Primary) | 0001575872-26-000725 |
| Document: 0001575872-26-000725-index.html | 0001575872-26-000725 |
| Document: 0001575872-26-000725.txt | 0001575872-26-000725 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 26, 2026 today | 6-K | — | awaiting T+5 | — | — |
Oct 26, 2026 today | 6-K | — | awaiting T+5 | — | — |
Oct 23, 2026 3d ago | 6-K | $13.21 | awaiting T+5 | — | $13.21 (−0.00%) |
Oct 23, 2026 3d ago | 6-K | $13.21 | awaiting T+5 | — | $13.21 (+0.00%) |
Oct 23, 2026 3d ago | 6-K | $13.21 | awaiting T+5 | — | $13.21 (+0.00%) |
Oct 23, 2026 3d ago | 6-K | $13.21 | awaiting T+5 | — | $13.21 (−0.00%) |
Oct 21, 2026 5d ago | 6-K | $13.19 | awaiting T+5 | — | $13.21 (+0.15%) |
Oct 14, 2026 12d ago | 6-K | $12.75 $13.19 | ▲ +3.45% | ▲ +3.00% | $13.21 (+3.61%) |
Oct 8, 2026 18d ago | 6-K | $12.20 $12.90 | ▲ +5.74% | ▲ +6.01% | $13.21 (+8.28%) |
Oct 7, 2026 19d ago | 6-K | $12.27 $12.75 | ▲ +3.91% | ▲ +4.89% | $13.21 (+7.66%) |
US Market Status
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