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RDY Q2 Earnings & Revenues Miss Estimates as Lenalidomide Sales Fall
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Key Takeaways
RDY's Q2 earnings of 12 cents missed the 16-cent estimate, while $905M in revenues missed the $981M estimate.
North American generics sales fell 23% as lower lenalidomide sales offset double-digit base business growth.
Emerging Markets and India revenues rose 24% and 17%, driven by new launches and favorable currency movements.
Dr. Reddy's Laboratories Limited (RDY - Free Report) reported second-quarter fiscal 2027 earnings of 12 cents per American Depositary Share (ADS), missing the Zacks Consensus Estimate of 16 cents. Earnings declined 33.3% year over year from 18 cents per ADS.
Revenues slipped 1.5% year over year to $905 million from $919 million reported in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $981 million. Lower lenalidomide sales in North America weighed on results despite double-digit underlying business growth and new generic product launches.
RDY's Q2 Results in Detail
Dr. Reddy's reported revenues under three segments: Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.
Global Generics revenues totaled INR 77.93 billion, down 0.7% year over year. The decline mainly reflected lower North America generics sales, partly offset by stronger performances in India and emerging markets. Revenues in the Others segment rose 357% to INR 471 million from INR 103 million in the year-ago quarter.
RDY's North America and Emerging Markets
North America generics revenues fell 23% year over year to INR 24.89 billion, primarily owing to lower lenalidomide sales. The base business, excluding lenalidomide, continued to grow at a double-digit rate, driven by new launches. During the quarter, Dr. Reddy's introduced six products, including a first-to-market launch of sugammadex injection.
As of Sept. 30, 2026, 80 filings awaited FDA approval, including 77 abbreviated new drug applications (ANDAs) and three new drug applications. Of the ANDAs, 46 were Paragraph IV applications.
Emerging Markets revenues rose 24% to INR 20.6 billion, driven by new products and favorable currency movements. Russia sales increased 15% to INR 10.1 billion, aided by acquisitions, price increases and exchange-rate benefits. Rest of World revenues surged 44% to INR 7.9 billion, supported by launches and currency tailwinds. RDY introduced 27 products across emerging markets during the quarter.
Dr. Reddy’s shares have lost 5.9% year to date against the industry’s 7.7% growth.
Image Source: Zacks Investment Research
RDY's India and Europe Performance
India revenues grew 17% to INR 18.51 billion on contributions from newly launched brands, acquired portfolios, higher volumes and price increases. The company launched four new brands. According to IQVIA's September 2026 data, Dr. Reddy's quarterly secondary sales increased 21% compared with growth of 14.7% for the Indian Pharmaceutical Market.
Europe revenues edged up 1% to INR 13.94 billion. New generic launches and favorable currency movements partly offset pricing pressure in the generics business. Nicotine replacement therapy revenues decreased 6% to INR 6.6 billion as the business continued to adjust to operating model changes following integration. RDY launched six generic products across Europe during the quarter.
Dr. Reddy's PSAI and Expense Trends
PSAI revenues amounted to INR 8.31 billion, down 12% year over year. Lower volumes in the active pharmaceutical ingredients business more than offset double-digit growth in contract development and manufacturing services and favorable foreign exchange movements. The company filed 28 drug master files globally during the quarter.
Gross margin contracted 254 basis points year over year to 52.1% in the second quarter of fiscal 2027. The decline was primarily attributable to lower lenalidomide sales in North America.
Selling, general and administrative expenses rose 6% year over year to $293 million. The increase reflected higher personnel costs from annual increments, adverse currency movements and elevated outbound freight expenses from supply-chain disruptions linked to the Middle East crisis. Management also cited higher costs for key starting materials and solvents.
Research and development expenses fell 16% to $55 million as the company reduced development spending on generics. Dr. Reddy's continues to invest in future growth drivers, including peptides, biosimilars and complex generic medicines.
Key Updates From RDY
Dr. Reddy's partnered with Takeda to bring Qdenga, India's first approved dengue vaccine, to the country's private market in the first half of 2027. It also expanded its collaboration with Gilead Sciences to provide access to investigational once-yearly lenacapavir for HIV prevention across 120 countries.
During the quarter, RDY secured FDA approval for its rituximab biosimilar, which partner Fresenius Kabi will commercialize in the United States. The company also launched its nivolumab biosimilar in India and received the country's first biosimilar approval for intravenous abatacept.
Generic semaglutide has secured approvals in 10 countries. Following an earlier issue involving its active pharmaceutical ingredient, RDY expects to resume supplies in November 2026, subject to successful product validation. Management also aims to launch its abatacept biosimilar in the United States following regulatory approval, with an FDA target action date of Dec. 22, 2026.
Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise
Over the past 60 days, estimates for TG Therapeutics’ 2026 earnings per share have risen from 92 cents to 94 cents. Over the same period, EPS estimates for 2027 have increased from $2.65 to $2.66. TGTX shares have soared 81.7% year to date.
TG Therapeutics’ earnings beat estimates in one of the trailing four quarters and missed in the remaining three, with the average surprise being 184.65%.
Over the past 60 days, estimates for Halozyme Therapeutics’ 2026 earnings per share have risen from $8.37 to $8.80. Over the same period, EPS estimates for 2027 have increased from $9.75 to $10.29. HALO shares have rallied 86.7% year to date.
Halozyme Therapeutics’ earnings beat estimates in three of the trailing four quarters and missed in the remaining one, with the average negative surprise being 19.12%.
Over the past 60 days, estimates for Harmony Biosciences’ 2026 earnings per share have remained constant at $3.79. Over the same period, EPS estimates for 2027 have risen to $3.98 from $4.06. HRMY shares have lost 3.5% year to date.
Harmony Biosciences’ earnings beat estimates in one of the trailing four quarters and missed in the remaining three, with the average negative surprise being 13.97%.
View the Zacks #1 Rank List
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RDY Q2 Earnings & Revenues Miss Estimates as Lenalidomide Sales Fall
Key Takeaways
Dr. Reddy's Laboratories Limited (RDY - Free Report) reported second-quarter fiscal 2027 earnings of 12 cents per American Depositary Share (ADS), missing the Zacks Consensus Estimate of 16 cents. Earnings declined 33.3% year over year from 18 cents per ADS.
Revenues slipped 1.5% year over year to $905 million from $919 million reported in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $981 million. Lower lenalidomide sales in North America weighed on results despite double-digit underlying business growth and new generic product launches.
RDY's Q2 Results in Detail
Dr. Reddy's reported revenues under three segments: Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.
Global Generics revenues totaled INR 77.93 billion, down 0.7% year over year. The decline mainly reflected lower North America generics sales, partly offset by stronger performances in India and emerging markets. Revenues in the Others segment rose 357% to INR 471 million from INR 103 million in the year-ago quarter.
RDY's North America and Emerging Markets
North America generics revenues fell 23% year over year to INR 24.89 billion, primarily owing to lower lenalidomide sales. The base business, excluding lenalidomide, continued to grow at a double-digit rate, driven by new launches. During the quarter, Dr. Reddy's introduced six products, including a first-to-market launch of sugammadex injection.
As of Sept. 30, 2026, 80 filings awaited FDA approval, including 77 abbreviated new drug applications (ANDAs) and three new drug applications. Of the ANDAs, 46 were Paragraph IV applications.
Emerging Markets revenues rose 24% to INR 20.6 billion, driven by new products and favorable currency movements. Russia sales increased 15% to INR 10.1 billion, aided by acquisitions, price increases and exchange-rate benefits. Rest of World revenues surged 44% to INR 7.9 billion, supported by launches and currency tailwinds. RDY introduced 27 products across emerging markets during the quarter.
Dr. Reddy’s shares have lost 5.9% year to date against the industry’s 7.7% growth.
Image Source: Zacks Investment Research
RDY's India and Europe Performance
India revenues grew 17% to INR 18.51 billion on contributions from newly launched brands, acquired portfolios, higher volumes and price increases. The company launched four new brands. According to IQVIA's September 2026 data, Dr. Reddy's quarterly secondary sales increased 21% compared with growth of 14.7% for the Indian Pharmaceutical Market.
Europe revenues edged up 1% to INR 13.94 billion. New generic launches and favorable currency movements partly offset pricing pressure in the generics business. Nicotine replacement therapy revenues decreased 6% to INR 6.6 billion as the business continued to adjust to operating model changes following integration. RDY launched six generic products across Europe during the quarter.
Dr. Reddy's PSAI and Expense Trends
PSAI revenues amounted to INR 8.31 billion, down 12% year over year. Lower volumes in the active pharmaceutical ingredients business more than offset double-digit growth in contract development and manufacturing services and favorable foreign exchange movements. The company filed 28 drug master files globally during the quarter.
Gross margin contracted 254 basis points year over year to 52.1% in the second quarter of fiscal 2027. The decline was primarily attributable to lower lenalidomide sales in North America.
Selling, general and administrative expenses rose 6% year over year to $293 million. The increase reflected higher personnel costs from annual increments, adverse currency movements and elevated outbound freight expenses from supply-chain disruptions linked to the Middle East crisis. Management also cited higher costs for key starting materials and solvents.
Research and development expenses fell 16% to $55 million as the company reduced development spending on generics. Dr. Reddy's continues to invest in future growth drivers, including peptides, biosimilars and complex generic medicines.
Key Updates From RDY
Dr. Reddy's partnered with Takeda to bring Qdenga, India's first approved dengue vaccine, to the country's private market in the first half of 2027. It also expanded its collaboration with Gilead Sciences to provide access to investigational once-yearly lenacapavir for HIV prevention across 120 countries.
During the quarter, RDY secured FDA approval for its rituximab biosimilar, which partner Fresenius Kabi will commercialize in the United States. The company also launched its nivolumab biosimilar in India and received the country's first biosimilar approval for intravenous abatacept.
Generic semaglutide has secured approvals in 10 countries. Following an earlier issue involving its active pharmaceutical ingredient, RDY expects to resume supplies in November 2026, subject to successful product validation. Management also aims to launch its abatacept biosimilar in the United States following regulatory approval, with an FDA target action date of Dec. 22, 2026.
Dr. Reddy's Laboratories Ltd Price, Consensus and EPS Surprise
Dr. Reddy's Laboratories Ltd price-consensus-eps-surprise-chart | Dr. Reddy's Laboratories Ltd Quote
RDY's Zacks Rank & Other Stocks to Consider
Dr. Reddy’s carries a Zacks Rank #2 (Buy) at present.
Some other top-ranked stocks in the biotech sector are TG Therapeutics (TGTX - Free Report) , Halozyme Therapeutics (HALO - Free Report) and Harmony Biosciences (HRMY - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, estimates for TG Therapeutics’ 2026 earnings per share have risen from 92 cents to 94 cents. Over the same period, EPS estimates for 2027 have increased from $2.65 to $2.66. TGTX shares have soared 81.7% year to date.
TG Therapeutics’ earnings beat estimates in one of the trailing four quarters and missed in the remaining three, with the average surprise being 184.65%.
Over the past 60 days, estimates for Halozyme Therapeutics’ 2026 earnings per share have risen from $8.37 to $8.80. Over the same period, EPS estimates for 2027 have increased from $9.75 to $10.29. HALO shares have rallied 86.7% year to date.
Halozyme Therapeutics’ earnings beat estimates in three of the trailing four quarters and missed in the remaining one, with the average negative surprise being 19.12%.
Over the past 60 days, estimates for Harmony Biosciences’ 2026 earnings per share have remained constant at $3.79. Over the same period, EPS estimates for 2027 have risen to $3.98 from $4.06. HRMY shares have lost 3.5% year to date.
Harmony Biosciences’ earnings beat estimates in one of the trailing four quarters and missed in the remaining three, with the average negative surprise being 13.97%.