Dr Reddy's Mexico API facility gets 2 observations in US FDA records assessment

Drugmaker Dr Reddy’s Laboratories Ltd on Friday (September 11) said the United States Food and Drug Administration (USFDA) completed a records assessment at its active pharmaceutical ingredient (API) manufacturing facility in Mexico, with two observations issued at the conclusion of the assessment.

The assessment was conducted under Section 704(a)(4) of the Federal Food, Drug, and Cosmetic Act at Industrias Químicas Falcón de México, S.A. de C.V., also known as Dr Reddy’s Mexico, located in Jiutepec, Morelos, Mexico.

The records assessment was conducted from July 17 to September 8, 2026. At the conclusion of the assessment, the USFDA issued Form FDA 2953 containing two observations. Dr Reddy’s said it will respond to the observations within the stipulated timeline.

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First Quarter Results

The company reported a net profit of ₹443.5 crore, significantly below the CNBC-TV18 poll estimate of ₹817.8 crore. Profit also declined 69% from ₹1,418 crore reported in the corresponding quarter last year.

The company said the June quarter was impacted by an unexpected ₹240 crore provision related to its semaglutide active pharmaceutical ingredient (API) business.

Revenue from operations came in at ₹8,070.5 crore, lower than the Street estimate of ₹8,804.7 crore, and down 6% from ₹8,545.2 crore a year earlier. Operating performance was equally subdued. EBITDA stood at ₹1,009 crore, missing analysts' estimate of ₹1,415.3 crore and falling 55% year-on-year from ₹2,278.4 crore.

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EBITDA margin contracted sharply to 12.5%, compared with 26.7% in the year-ago quarter, and remained well below the CNBC-TV18 estimate of 16.1%. The company noted that EBITDA margin was impacted by higher solvent and freight costs arising from the West Asia conflict.

Revenue from North America fell 35% year-on-year to ₹2,200 crore, though it rose 26% sequentially, accounting for 27% of consolidated revenue. The company attributed the year-on-year decline largely to lower sales of Lenalidomide.

During the quarter, Dr Reddy's launched six new products in the region and filed five Abbreviated New Drug Applications (ANDAs) and one New Drug Application (NDA) with the US Food and Drug Administration (USFDA).

Shares of Dr Reddy's Laboratories Ltd ended at ₹1,161.00, up by ₹20.20, or 1.77%, on the BSE.

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