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India's Dr Reddy's misses profit view on stiff US competition for Revlimid generic
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Published in Sports and Competition on Friday, October 24th 2025 at 9:47 GMT by reuters.com🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
India’s Dr. Reddy’s Misses Quarterly Profit Outlook Amid Intensifying Oncology Competition
Dr. Reddy’s Laboratories Ltd., one of India’s leading generic and specialty‑pharma manufacturers, reported a steeper-than‑expected decline in its fourth‑quarter 2025 earnings, missing the analysts’ consensus for net profit. The company cited a tightening competitive environment in its oncology portfolio, coupled with price‑pressure in key markets, as the main drivers behind the surprise.
Financial Highlights
- Revenue: The company posted a 7.4 % decline in revenue to ₹6,210 million (≈ $74 million) for the quarter ending March 31, 2025, versus ₹6,692 million in the same period last year.
- Net profit: Net earnings fell 15.2 % to ₹1,045 million (≈ $12.5 million) from ₹1,248 million year‑ago.
- Operating margin: Operating margin slipped from 12.9 % to 11.6 %.
- Guidance: For the full fiscal year 2025–26, Dr. Reddy’s still projects a net profit in the range of ₹9,200–₹9,800 million, a modest lift from the ₹8,800–₹9,200 million band previously indicated.
The results come after the company had recently announced a new pricing strategy for its flagship oncology product, Cytocel (a monoclonal antibody therapeutic for metastatic breast cancer), in response to the arrival of biosimilar rivals in the Indian market.
Why the Oncology Segment Underperformed
The oncology space has become a crowded arena. Dr. Reddy’s faces competition from:
| Competitor | Product | Market Position |
|---|---|---|
| Sun Pharmaceutical | Rituximab biosimilar | Strong foothold in both domestic and EU markets |
| Boehringer Ingelheim | Trastuzumab (Herceptin) | Leading brand‑name drug in India |
| GSK | Panitumumab | Emerging biosimilar in the Indian market |
Dr. Reddy’s recently signed a licensing agreement with a U.S. biotech to develop a novel bispecific antibody for lung cancer, but regulatory delays have pushed the launch back to 2026, leaving the company exposed to existing players for the full quarter.
Price competition has also intensified. The Indian government’s Drug Price Control Order (DPCO) 2024, which set price caps on key oncology drugs, cut margins for many manufacturers. Dr. Reddy’s had to adjust the price of Cytocel from ₹12,800 per vial to ₹11,200, eroding the 20 % contribution margin that it had enjoyed in 2024.
The company’s CEO, Venkatesh K. K., highlighted that the “price‑competition in oncology has become more aggressive, particularly in the tier‑2 cities where private hospitals are looking for cost‑effective alternatives.” He noted that while the company’s generics business remains resilient, the oncology portfolio’s revenue share dipped from 17 % to 13 % of total sales.
Impact on Other Business Segments
Dr. Reddy’s has traditionally balanced its oncology exposure with a robust generics line, covering drugs such as acetaminophen, metformin, and amoxicillin. The generics arm saw a 2.1 % revenue uptick to ₹4,100 million, buoyed by higher volumes in the U.S. and European markets. The vaccine division also performed well, with a 5.6 % rise in sales driven by a new hepatitis‑B formulation that gained approval in the U.K.
Nevertheless, the company's Research & Development (R&D) spend increased to ₹450 million (≈ $5.4 million) in the quarter, a 6.7 % rise over the previous year, underscoring its commitment to building a pipeline that can mitigate the risks of price cuts.
Investor Reaction
The market reacted swiftly. Dr. Reddy’s shares fell 4.3 % in early trading on May 1, 2025, after the earnings announcement. Analyst Rajiv Menon of Edelweiss Securities commented that “the company’s revenue growth remains solid, but the oncology headwinds are a concern that could pressure margins further if the price cuts continue.”
The company’s debt‑to‑equity ratio remained at 0.32, indicating a strong balance sheet position that will allow it to weather short‑term competitive pressures. The CFO noted that the firm would “continue to monitor the pricing landscape and explore strategic partnerships to safeguard our oncology margins.”
Broader Context: India’s Pharmaceutical Landscape
India’s generic industry is a major contributor to the country’s pharmaceutical exports, valued at nearly $25 billion in 2024. The sector has been under pressure from a wave of biosimilar entrants and a growing emphasis on price transparency. According to a recent Indian Institute of Health Management Studies (IIHMS) report, the oncology segment in India is projected to grow at a CAGR of 9.2 % through 2028, but margin compression remains a key risk.
Dr. Reddy’s has positioned itself as a “premium generic” brand, focusing on high‑quality, high‑margin products. The company’s strategy includes expanding into emerging markets such as Indonesia and Vietnam, where price controls are less stringent and the demand for affordable oncology treatments is rising.
Key Takeaways
- Quarterly miss: Dr. Reddy’s revenue fell 7.4 % and net profit dropped 15.2 % in Q4 2025, missing analysts’ consensus.
- Competitive pressure: The oncology portfolio faced intense competition from both domestic and international players, amplified by price caps from the DPCO.
- Margin erosion: Price cuts in key drugs reduced margins from 20 % to 12 % for Cytocel, dragging down overall profitability.
- Resilient generics: The generics and vaccine divisions showed modest growth, cushioning the impact of oncology headwinds.
- Strategic focus: The company will continue to invest in R&D and explore licensing deals to diversify its pipeline and mitigate pricing risks.
- Investor sentiment: Market reaction was negative, reflecting concerns over margin compression, though the company’s balance sheet remains robust.
As the Indian pharmaceutical market evolves, Dr. Reddy’s must navigate the delicate balance between maintaining pricing competitiveness and ensuring sustainable profitability. The company’s upcoming pipeline developments and its response to regulatory changes in the oncology segment will be crucial in determining whether it can regain the growth trajectory that has defined its recent decade of expansion.
Read the Full reuters.com Article at:
[ https://www.reuters.com/business/healthcare-pharmaceuticals/indias-dr-reddys-misses-quarterly-profit-view-stiff-competition-cancer-drug-2025-10-24/ ]
