Dr. Reddy’s - Strategic Initiatives, Enhanced Focus On The Branded Business, A Positive: Nirmal Bang

Nirmal Bang Report

We hosted the management of Dr. Reddy’s Laboratories Ltd. at our Annual Investor Conference to discuss the business outlook. The company has reiterated its guidance of single-digit growth in the U.S. and double-digit growth in other markets with 25% margins. But, growth and margins would not be linear.

In the U.S., the company continues to face annual double-digit price erosion. In the domestic market too, due to its acute-heavy portfolio, the company is growing at lower than industry rate.

However, excluding Covid, Dr. Reddy's is growing in double digits in almost all other markets. Also, the company is working on its domestic business to deliver market-beating growth in the medium term.

We like Dr. Reddy's management’s strategic decision-making ability and its enhanced focus on the branded business.

However, restructuring and shift in focus from Gx to BRx markets are likely to weigh on near to medium term base business growth. Also, capital allocation is still high towards developed markets complex products and the innovative pipeline.

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