Dr Reddy’s Q1 profit tumbles on semaglutide supply woes
Dr Reddy’s Laboratories reported a steep 69% YoY drop in consolidated net profit for Q1 FY27, hit by weak North America sales, lower global generics revenue, and supply disruptions of semaglutide. Shares closed 2.16% lower on the NSE.
Mumbai: Dr Reddy’s Laboratories on Wednesday reported a 69 per cent year-on-year (YoY) decline in its consolidated net profit for the first quarter of FY27, with earnings taking a hit from lower revenues in its global generics business, declining North America sales and disruptions in semaglutide supplies.
According to the company’s regulatory filing with the National Stock Exchange (NSE), net profit attributable to the owners of the company stood at Rs 4,435 crore during the April-June quarter, compared with Rs 14,178 crore in the corresponding period of the previous financial year.
Revenue from operations declined 5.5 per cent year-on-year to Rs 8,070.5 crore from Rs 8,545.2 crore in the year-ago quarter.
The company’s operating performance also weakened during the quarter. Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 60.4 per cent to Rs 861 crore from Rs 2,173 crore a year earlier, while EBITDA margin contracted sharply to 10.6 per cent from 25.3 per cent.
Other income, however, increased to Rs 355 crore during the quarter from Rs 290 crore in the corresponding period last year, as per its filing.
Dr Reddy’s said it made a provision of Rs 240 crore towards inventory and other associated costs arising from semaglutide supply disruptions during the quarter.
Earlier this month, the company had announced that supplies of its generic semaglutide would remain unavailable in India and continue to face disruptions in Canada until at least late October after an impurity issue in the active pharmaceutical ingredient (API) forced it to suspend production of new batches.
Semaglutide, the active ingredient used in the blockbuster weight-loss drug Wegovy, has recently gone off patent in India, opening the market to domestic generic manufacturers.
The production disruption is expected to delay Dr Reddy’s plans to strengthen its presence in the rapidly expanding semaglutide market.
The company’s largest market, North America, witnessed a sharp decline in revenue, which fell 35.3 per cent year-on-year to Rs 2,205 crore during the quarter.
Reflecting the weak quarterly performance, shares of Dr Reddy’s Laboratories ended 2.16 per cent lower at Rs 1,179.90 apiece on the NSE on Wednesday.
