On Thursday, Dr. Reddy's Laboratories Ltd (NYSE:RDY) stock is trading lower after the company released third-quarter 2025 earnings.
The pharma company clocked a net income of $165 million, marginally up from $161 million a year ago. Revenue increased from $843 million to $977 million — almost a 16% jump.
The growth was largely driven by revenues from the recently acquired Nicotine Replacement Therapy (NRT) portfolio, as well as revenues from India and Emerging Markets.
Last year, Haleon plc (NYSE:HLN) sold its nicotine replacement therapy business outside of the U.S. to Dr. Reddy's Laboratories SA, a wholly owned subsidiary of Dr. Reddy's Laboratories Limited for 500 million pounds (around $632 million).
The NRT portfolio consists of brands such as Nicotinell, Nicabate, Habitrol, and Thrive, which are available in gum, lozenge, and patch forms across over 30 markets.
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"We delivered double-digit growth aided by our newly acquired NRT business, new launches, and improved operational efficiencies," Co-Chairman & MD, G V Prasad, said.
Global generics revenues reached $850 million (73.75 billion rupees), showing a 17% year-over-year growth; underlying growth excluding NRT is 7%. Revenues from the acquired NRT portfolio, higher volumes and new product launches largely drove growth.
North American sales increased 1% (a sequential decline of 9%) to 33.8 billion rupees. Volume growth coupled with new product launches and favorable forex was offset by price erosion on a YoY basis. The sequential decline was largely due to lower sales of certain products, including Lenalidomide.
Gross Margin at 58.7% (GG: 61.3%, PSAI: 28.6%), a YoY increase of 20 basis points (bps), and a QoQ decline of 91 bps. The YoY increase was primarily due to a favorable product mix and manufacturing overhead leverage, which was partly offset by price erosion. Sequentially, the decline was primarily due to an unfavorable product mix.
Price Action: RDY stock is down 5.80% at $14.22 at the last check on Thursday.
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