US market drag keeps Dr Reddy's, Cipla under pressure despite strong product pipeline

Dr Reddy's Labs and Cipla underperformed the BSE Healthcare index over the past 12 months, declining 10% and 8% respectively. Dr Reddy's reported a sharp 69.2% drop in net profit to ₹434.8 crore on revenue of ₹8,070.5 crore (down 5.6% YoY), hit by lenalidomide normalisation and a ₹239.7 crore quality-related provision. Cipla's net profit fell 39.2% to ₹785.6 crore despite record June quarter revenue of ₹7,119.3 crore, as margins contracted from 25.6% to 16.7%. Emkay Research cut earnings estimates for both by 6-8% for FY27-28 and lowered Dr Reddy's target price by 8% to ₹1,200.