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Dr. Reddy's (RDY) Q1 Earnings Miss Estimates, Revenues Beat
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Dr. Reddy's Laboratories Limited (RDY - Free Report) reported first-quarter fiscal 2025 earnings of $1 per American Depositary Share (ADS), which missed the Zacks Consensus Estimate of $1.10 per ADS. The company reported earnings of $1.01 per ADS in the year-ago quarter.
Revenues grew 14% year over year to $921 million, surpassing the Zacks Consensus Estimate of $862 million. The year-over-year improvement was primarily driven by growth in global generics revenues in North America and India.
Shares of Dr. Reddy’s have gained 16.7% year to date compared with the industry’s 14.5% growth.
Image Source: Zacks Investment Research
Quarter in Detail
Dr. Reddy’s reports revenues under three segments: Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.
Global Generics revenues were INR 68.9 billion, up 15% year over year, in the fiscal first quarter. The increase was primarily driven by new product launches and the integration of its recently in-licensed vaccine portfolio in India, partially offset by price erosion in certain markets.
During the reported quarter, Dr. Reddy’s launched three new products in the United States.
As of Jun 30, 2024, cumulatively, 80 generic filings were pending approval from the FDA (75 abbreviated new drug applications [ANDAs] and five new drug applications). Of these 75 ANDAs, 45 are Para IVs.
PSAI revenues were INR 7.7 billion, up 14% from the year-ago quarter. The improvement was fueled by revenues from new products and improved volumes in base business.
Revenues in the Others segment came in at INR 0.2 billion, down 64% year over year.
Gross margin improved to 60.4% from 58.7% in the year-ago quarter due to a favorable product mix and overhead leverage. However, the uptick was partially offset by price erosion in generics markets.
Research and development expenses jumped 24% year over year to $74 million, driven by increased spending in ongoing clinical studies on differentiated assets and other developmental efforts.
Selling, general and administrative expenses were $272 million, up 28% year over year, primarily owing to investments in business growth and other initiatives.
During the reported quarter, Dr. Reddy’s entered into a definitive agreement with Haleon plc to acquire Nicotinell and related brands in the Nicotine Replacement Therapy category in several markets globally, excluding the United States.In consideration of the transaction, RDY is liable to make an upfront cash payment of GBP 458 million and milestone payments of up to GBP 42 million, payable in 2025 and 2026, to Haleon. This brings the total deal value to GBP 500 million. The transaction is expected to close in the fourth quarter of 2024.
Regulatory Update
In a separate press release, Dr. Reddy’s announced that the advisory committee to the regulatory body in the EU has adopted a positive opinion recommending the approval of its proposed biosimilar candidate, DRL_RI, for Roche’s (RHHBY - Free Report) Rituxan/MabThera (rituximab) to treat the same, currently approved, indications. DRL_RI will be marketed under the brand name Ituxredi in the EU markets.
Roche’s MabThera is a CD20-directed cytolytic antibody that is currently approved for several blood cancer and autoimmune indications like non–Hodgkin’s lymphoma, chronic lymphocytic leukemia and rheumatoid arthritis, among others. Roche’s rituximab is marketed under the brand name Rituxan in the United States and as MabThera in the EU.
Zacks Rank & Stocks to Consider
Dr. Reddy’s currently carries a Zacks Rank #4 (Sell).
In the past 60 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has remained constant at $2.46. During the same period, the consensus estimate for 2025 loss per share has narrowed from $1.95 to $1.91. Year to date, shares of ANVS have plunged 41.4%.
ANVS beat estimates in three of the trailing four quarters and missed once, delivering an average negative surprise of 1.39%.
In the past 60 days, estimates for RAPT Therapeutics’ 2024 loss per share have narrowed from $2.94 to $2.93. During the same period, the consensus estimate for 2025 loss per share has narrowed from $2.06 to $2.05. Year to date, shares of RAPT have plunged 86.6%.
RAPT’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 3.19%.
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Dr. Reddy's (RDY) Q1 Earnings Miss Estimates, Revenues Beat
Dr. Reddy's Laboratories Limited (RDY - Free Report) reported first-quarter fiscal 2025 earnings of $1 per American Depositary Share (ADS), which missed the Zacks Consensus Estimate of $1.10 per ADS. The company reported earnings of $1.01 per ADS in the year-ago quarter.
Revenues grew 14% year over year to $921 million, surpassing the Zacks Consensus Estimate of $862 million. The year-over-year improvement was primarily driven by growth in global generics revenues in North America and India.
Shares of Dr. Reddy’s have gained 16.7% year to date compared with the industry’s 14.5% growth.
Image Source: Zacks Investment Research
Quarter in Detail
Dr. Reddy’s reports revenues under three segments: Global Generics, Pharmaceutical Services & Active Ingredients (PSAI) and Others.
Global Generics revenues were INR 68.9 billion, up 15% year over year, in the fiscal first quarter. The increase was primarily driven by new product launches and the integration of its recently in-licensed vaccine portfolio in India, partially offset by price erosion in certain markets.
During the reported quarter, Dr. Reddy’s launched three new products in the United States.
As of Jun 30, 2024, cumulatively, 80 generic filings were pending approval from the FDA (75 abbreviated new drug applications [ANDAs] and five new drug applications). Of these 75 ANDAs, 45 are Para IVs.
PSAI revenues were INR 7.7 billion, up 14% from the year-ago quarter. The improvement was fueled by revenues from new products and improved volumes in base business.
Revenues in the Others segment came in at INR 0.2 billion, down 64% year over year.
Gross margin improved to 60.4% from 58.7% in the year-ago quarter due to a favorable product mix and overhead leverage. However, the uptick was partially offset by price erosion in generics markets.
Research and development expenses jumped 24% year over year to $74 million, driven by increased spending in ongoing clinical studies on differentiated assets and other developmental efforts.
Selling, general and administrative expenses were $272 million, up 28% year over year, primarily owing to investments in business growth and other initiatives.
Dr. Reddy's Laboratories Ltd Price and Consensus
Dr. Reddy's Laboratories Ltd price-consensus-chart | Dr. Reddy's Laboratories Ltd Quote
Key Pipeline Update
During the reported quarter, Dr. Reddy’s entered into a definitive agreement with Haleon plc to acquire Nicotinell and related brands in the Nicotine Replacement Therapy category in several markets globally, excluding the United States.In consideration of the transaction, RDY is liable to make an upfront cash payment of GBP 458 million and milestone payments of up to GBP 42 million, payable in 2025 and 2026, to Haleon. This brings the total deal value to GBP 500 million. The transaction is expected to close in the fourth quarter of 2024.
Regulatory Update
In a separate press release, Dr. Reddy’s announced that the advisory committee to the regulatory body in the EU has adopted a positive opinion recommending the approval of its proposed biosimilar candidate, DRL_RI, for Roche’s (RHHBY - Free Report) Rituxan/MabThera (rituximab) to treat the same, currently approved, indications. DRL_RI will be marketed under the brand name Ituxredi in the EU markets.
Roche’s MabThera is a CD20-directed cytolytic antibody that is currently approved for several blood cancer and autoimmune indications like non–Hodgkin’s lymphoma, chronic lymphocytic leukemia and rheumatoid arthritis, among others. Roche’s rituximab is marketed under the brand name Rituxan in the United States and as MabThera in the EU.
Zacks Rank & Stocks to Consider
Dr. Reddy’s currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the overall medical sector are Annovis Bio (ANVS - Free Report) and RAPT Therapeutics, Inc. (RAPT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, the Zacks Consensus Estimate for Annovis’ 2024 loss per share has remained constant at $2.46. During the same period, the consensus estimate for 2025 loss per share has narrowed from $1.95 to $1.91. Year to date, shares of ANVS have plunged 41.4%.
ANVS beat estimates in three of the trailing four quarters and missed once, delivering an average negative surprise of 1.39%.
In the past 60 days, estimates for RAPT Therapeutics’ 2024 loss per share have narrowed from $2.94 to $2.93. During the same period, the consensus estimate for 2025 loss per share has narrowed from $2.06 to $2.05. Year to date, shares of RAPT have plunged 86.6%.
RAPT’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 3.19%.