Dr Reddy's Q4 Net Profit Falls 86% to Rs 221 Crore Amid Cancer Therapy Impairments
Dr Reddy's Reports 86% Slump in Quarterly Profit
Drugmaker Dr Reddy's reported an 86% slump in quarterly profit on May 12, hurt by an impairment charge linked to its discontinued cancer therapy program. The company's consolidated net profit dropped to Rs 221 crore in the quarter ended March 31, from Rs 1,593 crore a year earlier. This decline marks the company's second consecutive quarterly decline in profit.
Consolidated Net Profit Comparison
| Year | Consolidated Net Profit (Rs crore) |
|---|---|
| FY2023 | 1,593 |
| FY2024 (Q1) | 221 |
During the quarter, Dr Reddy's decided to discontinue some R&D programs related to its Chimeric Antigen Receptor T-cell (CAR-T) therapy portfolio following clinical trial outcomes. CAR-T therapy is a form of cancer treatment. Following the decision, the company recognised a net loss of Rs 135 crore in its global generics segment.
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Dr Reddy's also recorded an additional impairment charge of Rs 91.4 crore after discontinuing a late-stage lung cancer study. The company highlighted that FY26 includes adverse impact of VAT liability provision of Rs 70 crore and New Labour Codes of Rs 117 crore.
Total revenue from operations fell 11.5% to Rs 7,546 crore, below analysts' estimate of Rs 8,246 crore, hit by pricing pressure and increasing competition in its key US market. Sales were also hurt by slowing demand for lenalidomide, a generic version of Bristol-Myers Squibb's cancer drug Revlimid, which has been a strong growth driver for Dr Reddy's over the last few years. Competition has intensified following lenalidomide's patent expiry, which has hurt sales.
Revenue Comparison
| Quarter | Total Revenue (Rs crore) |
|---|---|
| FY2023 (Q1) | 8,246 |
| FY2024 (Q1) | 7,546 |
Reddy's is banking on its generic semaglutide products as a key future growth driver. In March, the company launched its semaglutide drug Obeda in India, and is eyeing launches in Canada, Brazil and other markets after patents expire.
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Investor Takeaway
Investors should be cautious about Dr Reddy's performance due to the decline in quarterly profit.
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