Dr. Reddy’s Laboratories (DRL) reported a steady yet mixed performance in its latest quarterly results for Q1 FY26 (ended June 2025).

The company’s consolidated revenue rose 11.4% year-on-year to ₹8,545 crore, driven by robust growth in India and emerging markets, alongside contributions from its newly acquired Nicotine Replacement Therapy (NRT) business in Europe. However, despite strong top-line growth, net profit increased only about 2% to ₹1,418 crore, reflecting margin pressure amid rising costs and pricing erosion in key markets. The EBITDA came in at ₹2,278 crore, with margins at 26.7%, slightly lower than last year due to cost escalations and unfavorable mix. Regionally, DRL’s India business grew around 11%, supported by new launches and branded generics, while Europe recorded exceptional growth of over 140%, aided by the NRT acquisition. Emerging markets also performed well, showing strong momentum in countries like Russia and CIS nations. The major drag came from North America, which saw an 11% decline in revenue, primarily due to price erosion in key products such as generic Lenalidomide and timing-related order delays. This softness in the U.S. generics business underscores the continued challenges of a commoditized and highly competitive market. Operationally, DRL’s gross margin slipped to about 56.9%, down 350 bps year-on-year, as cost pressures and product mix weighed on profitability. Still, management emphasized that the company remains focused on strengthening its long-term growth levers — including biosimilars, complex generics, peptides, and consumer healthcare — while deepening its footprint in emerging markets to reduce dependence on the U.S. portfolio. The ongoing integration of the NRT business and new launches in India are expected to provide additional tailwinds in upcoming quarters.