Dr Reddy's Laboratories Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kunal Dhamesha - Macquarie Group - Analyst : The first one on the India business. So we have grown at around 16% year-on-year. But if we just look at the core business, how that performance has shaped up. And we have also mentioned that there is some weakness in cardiac and gastrointestinal segment, lower volume pickup. So is it transitory in nature? Or is there something more to be taken into account there?

Question: Kunal Dhamesha - Macquarie Group - Analyst : Sure, sure. There is one more question on our biosimilar [a foray now]. We have already filed rituximab now with denosumab also filed, but with partner. So if you could throw some light on the economics here for denosumab. And in terms of, let's say, eventual launch, can we assume that this would be the second product after rituximab and then followed by another one abatacept is the way we should look at?

Question: Kunal Dhamesha - Macquarie Group - Analyst : Sure, sure. And with your permission, last one for MVN. The INR1,240 million of NRT PBT that we have suggested, would it include any allocation of interest expense or just the amortization?

Question: Neha Manpuria - BofA Global Research - Analyst : Erez, on the US business, you mentioned that a few products have seen moderation quarter-on-quarter, including Revlimid. While Revlimid, we understand there's lumpiness, but what was the reason for the decline in the base business, excluding Revlimid? Because have we lost market share? Is the pricing erosion higher than we were expecting? Any color there?

Question: Neha Manpuria - BofA Global Research - Analyst : So just to get this correctly, we have lost market share in some of these products and hence, the decline. So that's -- this is the new base we need to work with. Is that understanding, right?

Question: Neha Manpuria - BofA Global Research - Analyst : Understood. Okay. Got it. And my second question is on the Consumer Healthcare business on the NRT transaction. Given that Haleon is still running the business for us till the time the integration happens, how should we look at investments in the business and the ramp-up in the NRT? Would that happen only after the integration is done? Is that fair to assume that in the next 12 months, the focus would be in actually integrating and then probably the business would go into investment stage?

Question: Neha Manpuria - BofA Global Research - Analyst : Okay. And that investment will flow through our P&L in the SG&A cost. That's a fair assumption?

Question: Amey Chalke - JM Financial Institutional Securities Pvt. Ltd. - Analyst : Congrats to the management on good set of numbers. So first question I have is on semaglutide. We understand that Reddy is one of the players who have filed for the Canada market when the patent expiry is expected somewhere early next year. At present, there are two to three players for this market. By the time we would be launching this product in this market, do you expect the players to increase? Or what would be the competitive scenario at that point of time? Also, if you can also explain Canada market, how similar is it with respect to US when it comes to price realization, market share gains, et cetera, how easy or difficult it is to gain market share in Canada, particularly because we have seen in case of Revlimid, there were a lot of -- there were a few players who had filed for this product even for Canada, but ramp-up had not been very encouraging. So if you can give some color on the Canada market with respect to semaglutide opportunity.

Question: Amey Chalke - JM Financial Institutional Securities Pvt. Ltd. - Analyst : Sure. And one more question related to semaglutide. Considering there is too much demand, which is expected to be there when the generic player enter this market all over the world. I believe there is still -- from the supply point of view, there would be a constraint in terms of both API as well as the pain assembly lines. So how are we going to ensure that our execution would be better there? Are we blocking some of the capacity, both in the pen as well as API side? How are we going to keep that thing in check?

Question: Amey Chalke - JM Financial Institutional Securities Pvt. Ltd. - Analyst : Sure. Just last question on the SG&A spend. I believe because we have Revlimid opportunity at present, which is giving us good cushion to spend more, there is a good amount of discretionary spend, which is happening at present. So is it possible for the management to give some visibility on how much this spend is discretionary at present, which could reduce post Revlimid? Or you think because these semaglutide kind of opportunities are there, it might continue?

Question: Bino Pathiparampil - Elara Securities (India) Private Limited - Analyst : A couple of questions from my side. Would you give some color on iron sucrose filing that you have done? Or do you expect approval in time soon?

Question: Bino Pathiparampil - Elara Securities (India) Private Limited - Analyst : Got it. Second on abatacept, some of your competitors have tried in the past, but it seems it's a difficult product and some of them seem to have given up. What gives you the confidence that your product can see through the FDA approval process?

Question: Bino Pathiparampil - Elara Securities (India) Private Limited - Analyst : Got it. And last one question, if I can, on lenalidomide. Going into FY26 in 4Q, that is in Jan '26, the kind of settlement with lower volume restrictions are coming to an end. So how should we look at lenalidomide? Will it continue a rough quarterly estimate smoothly until 3Q of next year and then drop off? Or do you think it will get front entered in the next year?

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : First question is on the NRT portfolio acquisition. See, while we have indicated that the SG&A cost this quarter has seen a kind of uptick post this acquisition and integration. And even after that, the PBT percentage of NRT portfolio, around 21% looks interesting. So how to think about the profitability of this acquired asset going ahead because current quarter is anyway is seeing the support of Haleon. And simultaneously, we have also thinking about spending more on building the portfolio and franchise. So while it looks interesting in terms of the profitability compared to our base business. So going ahead, how should we think in terms of the synergy benefit at the margin and profitability level for this acquired asset?

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : Okay. My second point is on the Nestle JV and the domestic business put together, I'm asking this question. So how long that we will take for the Nestle JV to really contribute meaningfully to the growth of the domestic business? That is one. And the second part of the domestic business question is while we do anticipate this is the business segment which should be growing the fastest among all other business segments for Dr. Reddy over the next few years. But right now, it is not even matching the industry growth momentum. So how should one think and what will start contributing incrementally to the anticipated so that it can reach the anticipated growth rate?

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : Okay. So the momentum accelerated growth will be seen in the domestic side starting next year onwards, sir, or it is '27 onwards?

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : Okay. Even the vaccine portfolio --

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : Sure. Okay.

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Erez, my question is again on semaglutide. So what kind of addressable market you are looking at outside of the US. You mentioned a lot of markets will open up starting 2026. And with the kind of capabilities which we have built on API or on the device front, what kind of market share you are looking for yourself?

Question: Damayanti Kerai - HSBC Securities & Capital Markets (India) Private Ltd. - Analyst : Okay. But any size indication, which you are targeting, say, for the bigger addressable markets?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Sir, just on abatacept, the timeline to file the product I missed in the comments, if you could repeat? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 2:00PM, REDY.NS - Q3 2025 Dr Reddy's Laboratories Ltd Earnings Call

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Abatacept biosimilar?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : December of this year?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Got it. So -- and then assuming 12 to 15 months' timeline to the regulatory review cycle, right?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Understood. And will this product be manufactured completely in-house as in drug product as well as drug substance?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Sorry, I didn't get your comment? We will manufacture?

Question: Tushar Manudhane - Motilal Oswal Securities Ltd. - Analyst : Understood. And just one more, if I may squeeze in, with respect to semaglutide, while the addressable market size seems to be difficult to highlight. But broadly, given that ex North America market, let's say, Canada, India, Brazil market, can this product do as much as Revlimid has done for us in North America?

Question: Saion Mukherjee - Nomura Financial Advisory and Securities (India) Private Limited - Analyst : Just one question on semaglutide. Is the oral formulation available for launch in 2026 in India and the other emerging markets? Or it would just be injectable and oral would come sometime later? If you can highlight the timelines for different formulation?

Question: Saion Mukherjee - Nomura Financial Advisory and Securities (India) Private Limited - Analyst : So in calendar 2027, even see oral launches?

Question: Foram Parekh - BOB Capital Markets Ltd. - Analyst : My question is on the European market. So ex of NRT, the European market has grown at 22%. So how sustainable is this growth rate going forward? And if you could explain the reason for this kind of growth.

Question: Anubhav Agarwal - UBS Securities India Pvt Ltd - Analyst : Two questions. One is for MVN sir. Just trying to understand the selling expenses in this quarter. So do they include any selling expense for NRT or they don't?

Question: Anubhav Agarwal - UBS Securities India Pvt Ltd - Analyst : So just trying to understand the SG&A sequentially, December over the September quarter, selling expenses excluding amortization is up like INR50 crores, INR60 crores, whereas NRT itself should have selling expenses of INR150 crores plus. So what else has gone down that net increase is only [INR50 crores] for us?

Question: Anubhav Agarwal - UBS Securities India Pvt Ltd - Analyst : Okay. Sure. Second question is on -- you guys have earlier mentioned that you have two good products in the US. You talked about iron sucrose as on API. What about the other? Is there any query or inspection or anything pending for it? Or do you still expect the approval for the other products now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 2:00PM, REDY.NS - Q3 2025 Dr Reddy's Laboratories Ltd Earnings Call

Question: Anubhav Agarwal - UBS Securities India Pvt Ltd - Analyst : Sorry, my question was very specific to the product. So you guys have mentioned two approvals, one, you talked about iron sucrose, second is for another product. Do you still expect approval of the other product anytime now? Or is that pending some query or anything else?

Question: Anubhav Agarwal - UBS Securities India Pvt Ltd - Analyst : Sorry, Erez, you mentioned in last quarter.

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : So on abatacept filing, whether you'll be filing both the IV and the subcutaneous -- in December 2025?

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : So subcutaneous is the beginning of '28.

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : Okay. And second, on the semaglutide filing in Canada. Are there any device patents that can block your version as a substitutable version to the innovator copy?

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : And is your device identical to the innovator device or you have a different device?

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : Sorry?

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : And just one final one, whether we should expect your SG&A expenses to stay at current levels, 28% of sales going forward?

Question: Vishal Manchanda - Systematix Shares & Stocks (I) Ltd. - Analyst : 28%.

Question: Shashank Krishnakumar - Emkay Global Financial Services Ltd. - Analyst : First one was just wanted to get your sense on the broader US biosimilar landscape given that our incremental investments are being directed towards biosims. We're increasingly seeing PBMs launching their own private labels. I think starting this year, several Humira biosimilars will also face formulary exclusions. So how do you see the overall US biosimilar landscape shaping up given that there are several products in the pipeline?

Question: Shashank Krishnakumar - Emkay Global Financial Services Ltd. - Analyst : That's helpful. And secondly, I just had a question on DFD-29. Are we also eligible for sales-based royalties here given that the product has not been approved?

Question: Bino Pathiparampil - Elara Securities (India) Private Limited - Analyst : Just quick housekeeping questions. One, the depreciation and amortization rate this quarter, is this quarter a good benchmark to project it forward?

Question: Bino Pathiparampil - Elara Securities (India) Private Limited - Analyst : So this rate is a stable rate to look forward to? Okay. Second question, the Russian currency has depreciated. Do you -- have you hedged the currency and for how long? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 23, 2025 / 2:00PM, REDY.NS - Q3 2025 Dr Reddy's Laboratories Ltd Earnings Call

Question: Bino Pathiparampil - Elara Securities (India) Private Limited - Analyst : Okay. So this quarter, Russia reported revenue in INRwill be roughly at the current market rate of rubles, right?

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : Yes. Just a clarification. In case of the semaglutide opportunity, what is the level of integration that we are having in terms of our manufacturing capability to the level of advanced, intermediate, intermediate levels or it is API and formulation?

Question: Surya Patra - PhillipCapital (India) Pvt. Ltd. - Analyst : And it is for both solid state as well as liquid state, as you mentioned, the entire value chain that you said.