Vivek Agrawal

Vivek Agrawal questioned the continued high SG&A spend, which is contrary to previous guidance for moderation post-Revlimid cliff, and sought an outlook on whether SG&A spend is expected to decline or grow at a lower rate in FY2027.

Answer

CEO Erez Israeli and CFO M V Narasimham explained that despite lower lenalidomide sales, SG&A as a percentage of sales (adjusted for one-time labor law costs) was 30%, reflecting continued investments in branded businesses and adverse forex impact. They anticipate that SG&A will grow at a slower pace, less than half the rate of top-line growth, as part of cost containment efforts for the post-lenalidomide era.

Vivek Agrawal questioned the continued high SG&A spend and sought an outlook on whether Dr. Reddy's expects moderation or decline in SG&A in FY27, or if it will continue to grow.

Answer

CEO Erez Israeli and CFO M V Narasimham explained that SG&A, at 30% of revenue (excluding one-off provisions), is controlled despite ongoing investments in branded businesses. They anticipate a moderation in SG&A growth, expecting it to grow at less than half the rate of the top line, as part of the company's post-lenalidomide cost containment strategy.