While drugmaker Dr Reddy's Laboratories' Q3 earnings were slightly above the Street's estimates, the highlight of the show was the declining revenue contribution from Revlimid, which also weighed on margins. With Revlimid, the blockbuster cancer drug and a key growth driver for Dr Reddy's in recent years, approaching its patent expiry in January 2026, concerns about potential revenue loss are mounting.

The concerns also triggered a 6 percent fall in the drugmaker's stock on January 24, a day after the release of its Q3 earnings. At 09.17 am, shares of Dr Reddy's were trading at Rs 1,224.20 on the NSE.

Investor attention is now focused on how the drugmaker offsets its impact on earnings. Even though, the management charted out new long-term levers to support future growth, it failed to trigger widespread optimism among analysts.

Though analysts at HSBC believe the launch of the anti-diabetic medication--Semaglutide in Canada in early 2026 could offer some relief to Dr. Reddy, they see it as insufficient to offset the revenue fall from Revlimid.

As for the other growth driver pointed out by Dr. Reddy's management, HSBC feels it will be semaglutide that will churn growth for a while before the other long-term levers scale up. HSBC has a 'hold' call on the stock with a price target of Rs 1,250.

Nuvama Institutional Equities offers a more optimistic view and believes that Dr. Reddy's can retain a large part of Revlimid earnings if it can deliver Abatacept and Semaglutide. On that account, Nuvama retained its 'buy' call on Dr Reddy's with a price target of Rs 1,533.

Analysts at JM Financial share a similar view. They believe the  Street is under appreciating the near-term Semaglutide opportunity in Canada as well as 18 other markets that are opening up from CY26. "Dr Reddy's remains best placed among generic players to benefit from this," the firm wrote. JM Financial has a 'buy' call on the drugmaker with a target price of Rs 1,753.

Dr Reddy's Labs Q3 FY25 results surpassed Street expectations, with a 2.5 percent on-year rise in net profit to Rs 1,413.3 crore, driven by contributions from its recently acquired NRT business which offset the fall in Revlimid sales. Revenue for the quarter surged 16 percent on year to Rs 8,358.6 crore, also buoyed by the NRT acquisition.

A Moneycontrol poll of brokerages had forecasted flat net profit growth at Rs 1,369 crore and revenue of Rs 7,980 crore for the quarter, meaning that the company surpassed expectations on both accounts.

However, pricing pressure in the US and a fall in Revlimid sales had a more pronounced impact on the drugmaker's operational performance. Its EBITDA margin shrank to 27.5 percent during the October-December quarter from 29.3 percent in the same quarter the previous year.