Dr Reddy’s Q2 Profit Falls as US Sales Weaken

Summary: Dr Reddy’s Laboratories reported second-quarter FY27 profit attributable to shareholders of ₹925 crore as North America revenue fell about 23% and total revenue slipped 1.5% year on year to ₹8,670.8 crore. The result still beat the market estimate cited by Reuters. India sales grew 17.2%, while a Canadian semaglutide recall reduced revenue by ₹71 crore and kept attention on the planned November relaunch.

Dr Reddy’s Laboratories delivered a better-than-expected quarterly profit, but weaker North American sales and a Canadian product recall kept the September-quarter result under pressure.

What Happened

For the quarter ended September 30, 2026, Dr Reddy’s reported revenue of ₹8,670.8 crore, down 1.5% year on year but up 7.4% sequentially. Profit attributable to shareholders was ₹925 crore, compared with ₹1,347 crore a year earlier.

EBITDA was ₹1,782.8 crore, representing a 20.6% margin, while gross margin was 52.1%. The company’s filing showed profit before tax of ₹1,227.7 crore.

North America revenue fell about 23% to ₹2,489 crore, reflecting the continuing impact of lower lenalidomide sales. India revenue grew 17.2% to ₹1,850 crore. Reuters reported that the ₹925 crore profit exceeded the ₹749 crore estimate from analysts polled by LSEG.

Why It Matters

North America has historically been an important earnings contributor for Dr Reddy’s, but price erosion and lower sales of key products can make quarterly performance volatile. The fall in that region offset stronger growth in India and illustrates why the company’s product pipeline and geographic mix matter.

The result also included a ₹71 crore revenue impact from the recall of semaglutide products in Canada. The company had already taken provisions related to the issue in the previous quarter, making the timing and execution of the planned relaunch important for near-term recovery.

Market Impact

Dr Reddy’s shares closed marginally lower on Friday, October 23, according to Reuters. The movement occurred in the same session as the results and does not, by itself, prove that earnings caused the decline. The stock was down about 3.3% in 2026 at that point, while the broader pharmaceutical index had risen roughly 12%.

Industry Context

Indian drugmakers are balancing domestic branded-generic growth against competitive pressure in the United States. Dr Reddy’s launched six products in the US during the quarter and had 80 abbreviated new drug applications awaiting approval, according to the company’s update.

Capital deployment remains active across the sector as companies invest in manufacturing, product development and balance-sheet capacity. BusinessNews1 recently covered Orchid Pharma’s ₹600 crore fundraise plan, another example of that broader investment cycle.

What To Watch Next

Whether Canadian semaglutide products return to the market in November as planned.
The pace of US approvals and launches from the pending application pipeline.
Further changes in lenalidomide sales and North American pricing.
Whether India’s double-digit growth can support consolidated margins.

Frequently Asked Questions

What was Dr Reddy’s Q2 FY27 profit?

Profit attributable to shareholders was ₹925 crore for the September 2026 quarter, down from ₹1,347 crore a year earlier. Despite the decline, the result was above the ₹749 crore consensus estimate cited by Reuters, helped by performance outside the pressured North American business.

Why did Dr Reddy’s North America revenue fall?

North America revenue declined about 23% to ₹2,489 crore. The main pressure came from lower lenalidomide sales, alongside the effect of the Canadian semaglutide recall. These factors outweighed stronger Indian-market growth and demonstrate the earnings sensitivity to a relatively small number of important products.

When could semaglutide sales resume in Canada?

The company is targeting a November 2026 relaunch after recalling affected products. Execution remains the key uncertainty: investors should watch for confirmation that supplies return on schedule, any further regulatory action, and whether sales recover without additional charges or inventory disruption.