Dr Reddy’s kicks off India’s big pharma earnings season with a narrow profit miss. The pharmaceutical company reported a profit of Rs 1,409.6 crore, up 1.26 per cent from the same quarter last year (Q1FY25). Revenue rose 11.37 per cent year-on-year to Rs 8,545.2 crore from Rs 7,672.7 crore. The company said the growth was broad-based and supported by its newly acquired Nicotine Replacement Therapy (NRT) portfolio.

The company’s Co-Chairman and MD, G V Prasad, said, “We delivered double-digit growth this quarter over the same period last year, reflecting our strength in branded markets and positive momentum in the Nicotine Replacement Therapy portfolio.”

Here are key highlights from Q1FY26

1. Dr Reddy’s Q1 profit narrowly misses estimates as North America sales dip

Dr Reddy’s consolidated net profit increased to Rs 1,418 crore rupees in the quarter ended June 30, below analysts’ estimate of Rs 1,494 crore, as per data compiled by LSEG cited by Reuters. The company struggled with pricing pressure on drugs and stiff competition in its key North America market. Revenue from Reddy’s biggest market North America fell 11.3% YoY for the Q1FY26 at Rs 3,410 crore.

“The decline was primarily due to increased price erosion in certain key products including Lenalidomide,” the company said in a statement.

2. Pricing pressure on Lenalidomide to intensify: G V Prasad

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.

But Revlimid’s patent expiry in 2026 would pave way for a greater number of players in the market, hurting demand for Dr Reddy’s products. Delayed approvals for new drug applications, pricing pressure in the US have been impacting the drugmakers’ growth in the market.

Commenting on the outlook, G V Prasad said, “The pricing pressure on Lenalidomide is expected to intensify in the U.S. generics market. We remain focused on strengthening our base business by delivery of our pipeline assets, improving overall productivity and business development.”

3. Europe revenue jumps 142% on strong NRT demand

Revenue from Europe more than doubled at Rs 1,274 crore, driven by demand for nicotine replacement therapy (NRT), which Dr Reddy’s bought from British drugmaker Haleon in 2024. Revenue from Europe market increased 142 per cent YoY including Rs 670 crore from NRT business.

4. India business grows 11 per cent on strong product launches

Revenue from India grew 11 per cent YoY to Rs 1,471.1 crore, driven by new product launches and better commercial execution. The company launched five new brands in the Indian market during the quarter including two innovative assets Beyfortus (RSV machine) and sensimmune (Acarizex Slit).

5. Margins improve sequentially but dip YoY

Gross margin for the quarter stood at 56.9 per cent, compared to 60.4 per cent in the same period last year. However, it showed an improvement from 55.6 per cent in the previous quarter. The margin decline on a YoY basis was due to price erosion in the generics segment and lower operating leverage.

Rival Cipla is set to report first quarter results on Friday, July 25.