Dr Reddy’s Q2 Results, October 23, 2026: Profit Falls 36% as Lenalidomide Fades

Dr Reddy’s Q2 results landed on October 23, 2026, and the headline number is not pretty: consolidated net profit attributable to shareholders fell 36% year-on-year to ₹925 crore for the July-September quarter, on revenue of ₹8,671 crore, down 1.5%. Dig one layer deeper, though, and the story is mostly about one drug running off rather than the rest of the business going soft. All figures below are IFRS consolidated numbers from the company’s board meeting outcome and press release filed with NSE and its Q2 FY27 investor presentation.

Dr Reddy’s Q2 results: the key numbers

• Revenue: ₹8,671 crore, down 1.5% from ₹8,805 crore a year ago and up 7.4% from ₹8,071 crore in Q1 FY27.
• Net profit (attributable to equity holders): ₹925 crore, down 36% from ₹1,437 crore in Q2 FY26, but up 109% from ₹443.5 crore in the June quarter.
• EBITDA: ₹1,783 crore, down 24% YoY. EBITDA margin came in at 20.6% of revenue, against 26.7% a year earlier.
• Gross margin: 52.1% of revenue, versus 54.7% in Q2 FY26 and 46.5% in Q1 FY27.
• Diluted EPS: ₹11.1, against ₹17.3 a year ago.
• Net cash surplus: ₹2,502 crore as of September 30, 2026.

North America drags, branded markets carry the quarter

North America revenue fell 23% YoY to ₹2,489 crore, from ₹3,241 crore. The company puts this squarely on lower sales of lenalidomide, the generic cancer drug that had been a big earner for several quarters. Strip it out, and management says the US base business grew in double digits, helped by new launches and volume gains. Sequentially, North America was up 13%.

The branded side did the heavy lifting. India revenue rose 17% to ₹1,851 crore, and emerging markets jumped 24% to ₹2,059 crore, with Russia alone at ₹1,008 crore (up 15%). Europe was roughly flat, up 1% at ₹1,393 crore, as price erosion and the changed operating model in the nicotine replacement (NRT) business offset new launches. Branded businesses, meaning India, emerging markets and NRT, now make up 53% of revenue.

The pharmaceutical services and API segment (PSAI) was the other weak spot, down 12% to ₹831 crore on lower API volumes, partly cushioned by the contract development and manufacturing arm, which the company says crossed $100 million in revenue over the 12 months to September.

Why the QoQ jump looks so big

The 109% sequential rise in profit needs context. The June quarter carried a provision of ₹240 crore for inventory and related costs linked to out-of-specification batches of semaglutide active ingredient. That one-off depressed Q1, so the base for comparison was low. Gross margin recovering from 46.5% to 52.1% tells the same story.

On costs, research and development spend dropped 16% YoY to ₹523.5 crore, or 6.0% of revenue versus 7.0% last year. Selling and admin costs rose to 32.4% of revenue from 30.0%. Lower R&D helped the margin a little, but not enough to replace lost lenalidomide profit.

First half and a management change

For H1 FY27, revenue stood at ₹16,741 crore, down 3.5% YoY, with attributable profit of ₹1,368.5 crore. Separately, the board approved the appointment of Akhil Ravi, CEO of subsidiary Aurigene Pharmaceutical Services, as Head of API and Services and a member of the Management Council from November 13, 2026. The filing notes he is a related party, being the son-in-law of Co-Chairman and MD G V Prasad.

What we’d watch from here

The question for the stock is simple: how fast can India, emerging markets and new US launches fill the lenalidomide hole? This quarter, they couldn’t fully do it, and margins showed that. On the plus side, the balance sheet is in net cash, and generic semaglutide approvals in several emerging markets give the company a new product to push. If you’re tracking the pharma pack this season, compare this with Torrent Pharma’s Q2 numbers, and read up on Dr Reddy’s recent DCGI approval for more background. New to reading results? Our guide on how to analyse quarterly results is a good start.

Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making investment decisions.