(Reuters) -Indian generic drugmaker Dr Reddy’s Laboratories reported second-quarter profit below estimates on Friday, hurt by higher costs and stiff competition for the generic version of cancer drug Revlimid in its key North America market.
The company’s consolidated net profit rose 7.3% on-year to 13.47 billion rupees ($153.25 million) in the three months ended September 30, but fell short of analysts’ average estimate of 14.1 billion rupees, as per data compiled by LSEG.
Total revenue rose 9.8% to 88.28 billion rupees, surpassing the estimate of 87.88 billion rupees, largely helped by the European market, where the company enjoys firm demand for nicotine replacement therapy (NRT) drugs – bought from British drugmaker Haleon in 2024.
“Growth in Q2 was driven by momentum in branded markets and steady contributions from the NRT portfolio, which helped offset the decline in U.S. lenalidomide sales,” Managing Director G.V. Prasad said.
Lenalidomide, a generic version of Bristol-Myers Squibb’s popular cancer treatment drug Revlimid, has been a key contributor to the company’s North America sales since 2022.
Revlimid’s upcoming patent expiry would open the market to more players, weighing on demand for Dr Reddy’s generic version. The company has already flagged increasing competition for the generic drug as new players enter the market.
In North America, the drugmaker’s biggest market, sales fell 13% – at the top end of the 6%-13% decline range estimated by analysts from at least three brokerages.
Additionally, delayed approvals for new drug applications and pricing pressure in the U.S. have hurt the company’s growth in the market.
To cushion some of this impact, Dr Reddy’s has been looking to diversify its product mix beyond generics by strengthening its consumer healthcare portfolio, including over-the-counter medicines and nutrition supplements.
The company’s total expenses in the reported quarter rose 15.2%.
Rival Cipla will report second-quarter results next week.
(Reporting by Kashish Tandon and Hritam Mukherjee in Bengaluru; Editing by Janane Venkatraman and Mrigank Dhaniwala)
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