Dr. Reddy's Laboratories vs Sunpharma Q3 FY26

Dr. Reddy's Q3 FY26 revenue grew 4.4% YoY to INR 8,727 crore, with base business (ex-lenalidomide) delivering double-digit growth. EBITDA margin of 23.5% (24.8% adjusted for one-time labor code provision) declined 401bps YoY due to lower lenalidomide sales and pricing pressure. PAT fell 14% to INR 1,210 crore. India business surged 19% YoY driven by innovative portfolio, while North America generics declined 16% due to lenalidomide erosion. Semaglutide launch in India on track for March 21, with Canada approval expected by May. Abatacept BLA filed on schedule. Key risk: regulatory delays for biosimilars (Denosumab CRL, Rituximab re-inspection) could push U.S. launches beyond FY27.

Guidance read

Semaglutide launch in India on March 21, 2026: Dr. Reddy's will launch generic Ozempic (diabetes) in India on March 21, with all strengths including oral Rybelsus. Canada Semaglutide approval expected by May 2026: Health Canada response expected between end-February and May 2026, with launch preparation underway for Q4 or Q1. Abatacept U.S. launch expected end of calendar 2026: IV presentation BLA filed December 2025; approval expected around end-2026, with sub-Q filing in July 2026 and launch by Jan/Feb 2028. Global generics gross margin range 50%-55% post-lenalidomide: From Q4 FY26 onwards, without lenalidomide, global generics and PSAI gross margin expected in 50%-55% range.

Risk read

Key risks include Regulatory delays for biosimilars in U.S. — Denosumab received CRL from FDA due to partner Alvotech's facility issues; Rituximab requires re-inspection. Both face delays of at least 6-12 months.; Lenalidomide revenue cliff from Q4 — CEO advised to assume zero lenalidomide revenue from Q4 FY26, which will impact overall revenue and margins.; Semaglutide pricing pressure and competition — Management expects eventual competition in Canada and other markets, with pricing likely settling at lower end of $20-$70 range.; SG&A cost growth moderation uncertain — SG&A as % of revenue remains elevated at 30% (ex-one-off); management expects growth to moderate but absolute level may not decline..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

SU

Sunpharma

Q3 FY26 · Healthcare

Sun Pharma delivered a strong Q3 FY26 with consolidated revenue of INR 15,469 crore (+15.1% YoY) and EBITDA of INR 4,949 crore (+23.4% YoY), driven by broad-based growth in India (+16.2%) and emerging markets (+21.6%), partially offset by flat US sales. EBITDA margin expanded to 31.9% on better product mix, while PAT grew 16% to INR 3,369 crore despite a higher tax rate. Management highlighted the upcoming launch of generic semaglutide in India as a key growth catalyst, with approvals received for both diabetes and weight management. However, US generic sales remain under pressure from competition and manufacturing compliance issues, and the company faces uncertainty from proposed US pricing reforms. The strong balance sheet (net cash $3.2B) provides M&A flexibility, though management remains disciplined.

Guidance read

Semaglutide launch in India on patent expiry: Sun Pharma plans to launch generic semaglutide in India on day one of patent expiry for both chronic weight management and type 2 diabetes, under brands NovelTreat and SemaTrinity. R&D spend guidance for next year: Management indicated they will provide R&D spend guidance for the next fiscal year in the next quarter's call. Phase 2b trial for GL0034 to complete in 12-18 months: The phase 2b study for GL0034 in type 2 diabetes has started and is expected to complete within 12-18 months.

Risk read

Key risks include US generic sales pressure from competition — US generic sales declined due to additional competition on certain products, and recovery depends on resolving manufacturing compliance issues at several sites.; Proposed US Most Favored Nation pricing models — CMS proposed pricing models could impact US revenues; management declined to share mitigation strategies, citing commercial sensitivity.; Higher effective tax rate impacting PAT growth — Effective tax rate rose to ~25% from ~15% last year, dampening PAT growth relative to EBITDA growth; expected to remain in that range.; Milestone income may not recur — Management noted that milestone income of $55 million in Q3 may not recur in future quarters, potentially impacting revenue comparability..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.