Dr. Reddy's Laboratories Limited Reports Mixed Q1 FY 2027 Results Amid Challenging Market Conditions
HYDERABAD, INDIA. Dr. Reddy's Laboratories Limited, a leading global pharmaceutical company, recently reported its financial performance for the first quarter of fiscal year 2027 (Q1 FY 2027). The results reflect a mixed bag of achievements and challenges faced by the company during the period.
The company's consolidated revenue stood at INR 8,071 crores ($853 million), representing a decline of 5.6% year-over-year but a growth of 7.4% on a sequential basis. This performance was largely driven by strong sales across key markets and favorable currency movements. However, the figures were offset by lower lenalidomide sales.
Chief Financial Officer MV Narasimham highlighted that while the company reported revenue decline of 5.6%, its underlying base business continued to deliver healthy double-digit growth in all key geographies, including North America. This growth was fueled by new product launches and favorable currency movements.
On a quarterly basis, consolidated gross profit margin stood at 46.5%, which is a decrease of 1,039 basis points year-over-year but an increase of 169 basis points sequentially. The decline in margins during the quarter was largely on account of lower lenalidomide sales and higher solvent costs due to the Middle East conflict.
The company's SG&A expenses were at INR 2,082 crores ($220 million), representing a 12% year-over-year increase. This growth was primarily driven by higher personal costs, adverse Forex movement, targeted investments in the branded business, as well as elevated freight costs arising from disruptions related to the Middle East crisis.
The R&D spend for the quarter stood at INR 577 crores ($6 million), reflecting a decline of 8% year-over-year but an increase of 6% sequentially. This decrease was largely due to lower biosimilar development expenditure as compared to the previous year.
Excluding the provision related to semaglutide API challenges, the company's underlying EBITDA stood at INR 1,009 crores ($107 million), representing a margin of 12.5% of revenues. This figure reflects a 1416 basis point decline in EBITDA margins year-over-year and a 55 basis point sequential decrease.
Effective tax rate for the quarter was 21.3%, compared to 26% in the corresponding period last year, due to favorable resolution of tax assessment and jurisdictional mix changes.
