Dr. Reddy's Laboratories Limited

Top-line / profitability: revenue down, EBITDA pressured by semaglutide + one-offs, base business resilient - Consolidated revenue: INR 8,071 cr (~$853m), -5.6% YoY, +7.4% QoQ. - Underlying EBITDA margin: 12.5% (management said excluding semaglutide API-related provision, margin would be ~15.4%). - Reported EBITDA margin impacted by: - Lower lenalidomide revenues vs prior year. - INR ~240 cr provision related to semaglutide API-related challenges (rejected batches, lost production, linked incentives, inventory/other costs). - Higher solvent costs attributed to Middle East conflict. - Good: management emphasizes “underlying base business” (ex-lenalidomide) continued healthy double-digit growth across key geographies (esp. North America), supported by new launches and favorable FX.

Margin outlook / guidance: “high teens” now, aiming to stay near ~20% excluding sema - Company estimated that excluding semaglutide provision + related non-sold/rejected/batch & PLI-type costs, EBITDA margin would be in the high teens (~~18% stated by Erez in Q&A). - Guidance expectation (key investor point): management reiterated they still expect to be “in the neighborhood of 20%” EBITDA margin excluding semaglutide and that this should be maintained across the next quarter(s)—even when semaglutide is not contributing in the near term. - Surprise/important framing: management suggested margins would recover above that level upon semaglutide resumption (current uncertainty is timing/extent of return).

Semaglutide: operational challenge with near-term plan to resume supplies (risk but no patient safety risk) - No patient safety risk: management explicitly stated no risk to patients who consumed product; quality/safety remain priority. - Pace/timeline: planning to resume semaglutide commercial supplies by November. - Sold ~180,000 pens before stopping (Q&A). - Target to supply ~6–7 million pens between Nov–Mar if testing and scale-up go as planned. - Root cause identified; program management timeframe around September 2026; success likelihood estimated ~80–90%, but not guaranteed. - Competition risk addressed: management believes demand for 6–7m pens will still be there; new entrants in those months are expected to be limited enough that market share impact should be manageable. - Regulatory risk (investor reassurance): because API specs are unchanged, management does not expect application delays in other markets (e.g., Brazil), aside from manufacturing/scale-up resolution.