Dr Reddy’s Shares Tumbles After Missing Q3 Estimates

Shares of Dr Reddy’s Laboratories were down by 6% in today’s trading session after the company reported lower-than-expected Q3 numbers. Low sales and increased pricing pressure in the North American market were the key reasons for the weak performance.

The pharmaceutical company was the top loser on the Nifty Pharma and the Nifty 50 index. As of 11:45 am, pharma index slumped by 1.1%, while Nifty surged by 0.5%.

Sumit Gupta, analyst at Centrum Broking, “The drop in shares comes as market sees near-term concerns over the company's muted U.S. sales.”

Notably, Indian drugmakers are struggling with subdued sales in the United States, delayed approvals and lower pricing amid stiff competition.

Kunal Lakhan, an analyst at CLSA said that the growth is set to remain weak due high dependence on its generic version of Revlimid.

Analysts at Nuvama noted that drug sales were “nearing the cliff” amid stiff competition in the region.

“Investor attention is on how Dr. Reddy's offsets the gRevlimid impact on earnings,” Nuvama analysts said.

Sales in North America surged by 1% YoY but slipped 9% on a sequential basis. Meanwhile India business witnessed subdued growth due to weakening of sales in its gastro and cardio segments, Macquarie noted.