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Dr. Reddy’s Laboratories Ltd. RDY stock fell Wednesday after the generic drugmaker reported first-quarter fiscal 2027 earnings and revenue that missed Wall Street estimates. Investors also weighed U.S. President Donald Trump’s plan to impose steep tariffs on imported generic drugs over the next several years.
Trump Details Phased Generic Drug Tariff Plan
Trump said generic drugs imported into the U.S. would remain exempt from tariffs until August 2028 before facing sharply higher duties.
In a social media post, Trump wrote, “Effective August 1st, 2026, all Generic Drugs being brought into the United States will continue to have a TARIFF of 0% for a two year period of time, after which the TARIFF will be raised to 100% for a one year period of time, and 200% thereafter.”
Trump said the policy aims to push pharmaceutical companies to move generic drug manufacturing to the United States. Companies that do not build production facilities within the designated timeframe would face the higher tariffs.
Dr. Reddy’s Misses First-Quarter Expectations
Dr. Reddy’s reported first-quarter earnings of 6 cents per share, missing the analyst consensus estimate of 17 cents.
Revenue declined to $853 million from $903 million a year earlier, below the consensus estimate of $925.53 million.
Generic drug sales fell 5% year over year to 71.99 billion Indian rupees, or about $746 million. Active pharmaceutical ingredient (API) sales rose 4% to 8.52 billion Indian rupees, or about $89 million.
“Our Q1FY27 performance reflected the expected transition beyond lenalidomide revenues, along with an unexpected impact related to semaglutide API. However, our underlying base business continued to deliver healthy double-digit growth across all key geographies,” Co-Chairman and Managing Director G.V. Prasad said.
Company Aims To Resume Semaglutide Supply By November
Dr. Reddy’s found that certain semaglutide batches were out of specification because of an issue with the active pharmaceutical ingredient (API) used in the product.
During the earnings conference call, company executives said they are working to resume semaglutide supplies as soon as possible and hope to return the product to the market by November.
Management also said relocating manufacturing to the United States immediately is not practical given the current tariff environment.
RDY Price Action: Dr. Reddy’s shares were down 8.28% at $11.53 at the time of publication Wednesday, according to Benzinga Pro.
Photo via Shutterstock
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This article Why Dr. Reddy's Sank: Profit Plunge, Semaglutide Setback And Trump's Tariff Threat originally appeared on Benzinga.com.
