Tushar Manudhane

Tushar Manudhane asked for clarification on the approved indications for Semaglutide in India (diabetes vs. weight management), whether Rituximab re-inspection would cover the entire site or just specific lines, the filing timeline for Abatacept subcutaneous version in the U.S., and the updated R&D spend guidance.

Answer

CEO Erez Israeli confirmed India's Semaglutide launch in March is for the diabetic product (Ozempic generic), with the weight management equivalent (Wegovy) coming later. He clarified that re-inspections, especially for sterile products, commonly focus on specific lines. The Abatacept sub-Q U.S. filing is scheduled for July 2026, with approval expected by Jan/Feb 2028. CFO M V Narasimham and CEO Erez Israeli reiterated the R&D spend guidance of 7-8% of revenue, citing ongoing development of new molecules and long-term product aspirations.

Tushar Manudhane asked if the Semaglutide approval in India covers both diabetes and weight management, and if the weight management indication would be launched later. He also inquired about the likelihood of the U.S. FDA inspecting only a specific line for Rituximab reinspection and the tentative filing timeline for the subcutaneous version of Abatacept in the U.S. FDA, along with R&D spend guidance.

Answer

CEO Erez Israeli clarified that the initial Semaglutide launch in India in March is for the diabetic product (generic Ozempic), with other strengths and the equivalent of Wegovy for weight management to follow. He confirmed that the U.S. FDA can inspect only a specific line for PAI, which is common for sterile products. For Abatacept sub-Q, filing in the U.S. is expected in July 2026, with approval targeted for January/February 2028. CFO M V Narasimham reiterated the R&D spend guidance of 7%-8% of revenue, citing ongoing and new product development.

Tushar Manudhane asked for an overview of total annualized biologics sales across markets, the regulatory implications of using a CMO for Rituximab (stability data), and the future gross margin outlook for the PSA segment, including quantified peptide sales.

Answer

CEO Erez Israeli detailed biologics launches in Europe (bevacizumab, Rituximab) and India/Emerging Markets (same plus Pembro, Nivo). He clarified the Abatacept CMO strategy involves tech transfer and stability data for a 2028 launch. CFO Mannam Narasimham projected PSA gross margins in the 20-25% range. CEO Erez Israeli stated current peptide sales are small but capacity is built for up to 800 kg.

Tushar Manudhane from Motilal Oswal asked about the investment in the Keytruda (pembrolizumab) biosimilar trial, the rationale for lower R&D spending, and the long-term potential of the semaglutide opportunity.

Answer

CEO Erez Israeli explained the Keytruda collaboration with Alvotech was structured to minimize net investment, making it a good ROI opportunity despite being a crowded space. He described the current R&D spend as flexible, with 500-600 basis points of discretionary spend that can be adjusted based on revenue performance. He characterized semaglutide not as a short-term opportunity but as the beginning of a decade-long journey in GLP-1 products, with plans for a portfolio of 26 related assets.

Tushar Manudhane asked about the growth outlook for the European business excluding the NRT portfolio and inquired about the competitive landscape for generic semaglutide, particularly whether the synthetic manufacturing route would lead to different competitive dynamics.

Answer

CEO Erez Israeli stated that Europe is a key growth area, driven by expansion into more countries, leveraging the U.S. pipeline, launching biosimilars, and growing the NRT business. He explained that the synthetic route is viable for injectable semaglutide and that competition will ultimately depend on the number of players with approved products and manufacturing capacity, for which Dr. Reddy's is preparing for both limited and highly competitive scenarios.

Tushar Manudhane of Motilal Oswal Financial Services asked about the sustainability of the North America sales growth, particularly in the base portfolio, and questioned the moderate growth rate of the India business excluding the Sanofi acquisition.

Answer

CEO Erez Israeli asserted that the growth in North America is consistent and driven by multiple products and strong customer service, not a one-off event. For the India business, he reiterated his confidence that growth will accelerate to double-digits for the full year, even without the inorganic contribution.

Tushar Manudhane inquired about the approval and launch status for rituximab in Europe. He also asked for an explanation for the quarter-on-quarter increase in inventory and whether the current SG&A expense level is a sustainable run rate for FY'25.

Answer

CEO Erez Israeli stated that the launch of rituximab in the U.K. is planned for the current quarter, with EMA inspection also awaited. CFO Parag Agarwal addressed the other points, explaining that the inventory increase was a proactive measure to mitigate geopolitical supply chain risks. He also noted that SG&A as a percentage of sales (around 27.7% for the year) is expected to remain in a similar range going forward.