Dr Reddy's profit falls 36% as sales of one star medicine fade in America

Picture a samosa stall whose best seller suddenly stops selling. The stall still has chai, pakoras and sandwiches, but the till looks much lighter. That is roughly what just happened to one of India's biggest medicine makers.

On Friday, 23 October 2026, Hyderabad-based Dr Reddy's Laboratories reported a 36% fall in consolidated net profit to ₹925 crore for July to September 2026. The main reason, the company said, was lower sales in North America of one medicine: lenalidomide, better known by the brand name Revlimid.

First, who is Dr Reddy's?

Dr Reddy's is an Indian drug company based in Hyderabad. It was founded in 1984 by Kallam Anji Reddy. It started out as a supplier to other Indian drug makers and later began selling medicines abroad. Today it sells in India, the United States, Europe and many other countries.

A big part of what it sells are generic medicines. So what is a generic?

What is a generic medicine?

When a company invents a new medicine, it gets a patent. A patent is like a "no copying" sign from the government: for a set time, only the inventor can sell that medicine. When the patent ends, other companies may make a medicine with the same active chemical as the original. That copy is called a generic.

Think of a famous secret chutney recipe. Once the secret is out, every stall on the street can make the same chutney. With more sellers, the price drops. The same page explains that generics are usually sold at much lower prices, because many companies compete once the patent is gone.

Four steps: a company invents a medicine and gets a patent, the patent keeps copies away, the patent ends and others make it, more sellers bring lower prices — How a generic medicine comes to the market, in four simple steps.

The star product that faded

Lenalidomide is a blood cancer drug, as Mint describes it, and Dr Reddy's sells a generic version of it in North America. A year ago, sales of this one generic were very strong. Goodreturns explains that those strong sales created a "high base": last year's number was so big that this year's looks small next to it.

This year, that contribution has faded. North America is Dr Reddy's largest region. Its revenue there fell 23% to ₹2,489 crore, mainly because of lower lenalidomide sales, Business Standard reports. Mint says North America now makes up 29% of the company's total revenue.

Revenue is all the money that comes in from sales. Profit is what is left after paying every cost. When one high-earning product sells less, both can drop at once.

Bar chart: Dr Reddy's profit was 1,437 crore rupees in July to September 2025 and 925 crore rupees in July to September 2026 — Same three months, one year apart: profit fell 36%.

The numbers, in plain words

Profit: ₹925 crore, down 36% from ₹1,437 crore a year earlier.
Revenue: ₹8,670.8 crore, down 1.5%, per Business Standard.
North America: ₹2,489 crore, down 23%.
India: up 17% from a year ago.
Emerging markets (fast-growing countries outside India, the US and Europe): up 24% to ₹2,059 crore, per Mint.

A quick note on the profit number. "Consolidated" means the whole group added together, the parent company plus the smaller companies it owns. This post uses ₹925 crore, the consolidated profit reported by Business Standard and Mint. The Economic Times reports a slightly different figure, ₹913.4 crore against ₹1,426.8 crore a year earlier. Both versions show the same 36% fall.

Wait, profit also more than doubled?

Yes, and both things are true. Compare with last year and profit fell. Compare with the quarter just before (April to June 2026), and it jumped. Business Standard says profit rose 109% from ₹443.5 crore in April to June.

Why was April to June so weak? That quarter carried a one-time hit of ₹239.7 crore linked to semaglutide, a newer medicine. Mint reports that some batches of the main ingredient were found "out of specification", meaning they did not meet the required standard, so the company paused supply for a while. That hit did not repeat this quarter.

A number counting up to 109 percent, with a small bar for 443.5 crore rupees and a taller bar for 925 crore rupees — From April to June to July to September 2026, profit more than doubled.

The company's chief financial officer, M V Narasimham, said on Friday evening, as quoted by Mint: "we will relaunch this molecule most likely in November."

What is still growing?

Dr Reddy's says its "base business" kept growing. Base business means everything except lenalidomide in North America. Think of it as the stall's regular menu, without the one star item.

Here is what grew, as reported:

In North America, the base business grew 12.4%, while the overall market grew 2.4%, Business Standard says. The company launched six products in the US in the quarter.
In emerging markets, it launched 27 products.
In India, it moved up to eighth place in the Indian medicine market, from tenth a year earlier.
Its contract manufacturing business, Aurigene Pharmaceutical Services, crossed $100 million in sales over the last 12 months. Contract manufacturing means making medicines for other drug companies, like a kitchen that cooks for other restaurants.

The Free Press Journal adds that Dr Reddy's EBITDA fell 24.2% to ₹1,783 crore. EBITDA is a way of measuring how much a company earns from its daily work, before loan interest, tax and the slow wear of machines are counted.

Costs are rising too

There is another pressure. The company said higher costs of key raw materials and of shipping goods out cut its margins by about 100 basis points in the quarter, Business Standard reports. A margin is the share of each sale that is left as earnings. 100 basis points is one percentage point. So out of every ₹100 of sales, about ₹1 less was left.

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Why this matters to you

This story is a simple business lesson. A company with one giant hit product can look amazing for a few years. But a generic sells well only until many others make the same thing. When that happens, the company needs other products ready to take over.

Co-chairman and managing director G V Prasad said, as quoted by Business Standard, that the company is focused on "strengthening our core businesses, enhancing productivity, and investing in strategic growth platforms".

For students thinking about careers, it also shows how an Indian company from Hyderabad competes in the US, Europe and dozens of other countries. Whether its newer products can fill the gap left by one fading star is the question the next few quarters will answer.

Sources

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