India's Dr Reddy's posts quarterly profit slump on semaglutide inventory costs

HYDERABAD: Indian drugmaker Dr Reddy’s reported a smaller-than-expected quarterly profit on Wednesday, weighed by inventory and related costs associated with disruptions to semaglutide supply, the company said.

Consolidated net profit tanked 68.7% to 4.44 billion rupees ($45.98 million) in the first quarter ending June 30.

Analysts, on average, had estimated profit to fall to 7.22 billion rupees, according to data compiled by LSEG.

Dr Reddy’s, which is counting on semaglutide as a major growth driver in India and a few global markets, said earlier this month that supplies of its generic version would remain unavailable in India and face disruptions in Canada until at least late October after an impurity issue in the active ingredient forced it to halt production of new batches.

Semaglutide, the base ingredient in popular weight-loss drug Wegovy, is now off patent in India, opening the market to generic drugmakers.

The company said on Wednesday that it made a provision of 2.39 billion rupees towards inventory and other associated costs related to the semaglutide disruptions during the quarter.

The disruption is a setback to Dr Reddy’s ambitions in India’s fast-growing semaglutide market.

Revenue from operations fell 5.5% to 81 billion rupees, below analysts’ average estimate of 81.6 billion rupees, hit by pricing pressure and increasing competition in its key U.S. market.

Revenue from North America fell 35.3% to 22.05 billion srupees.

The company has been grappling with declining sales of Lenalidomide, its generic version of Bristol Myers Squibb’s blockbuster cancer drug Revlimid, as more rivals enter the market after the drug lost exclusivity.

Revenue from company’s India business rose 16.8% to 17.2 billion rupees.