Dr. Reddy's Reports Solid Fiscal Fourth-Quarter Results; To Ramp Up Product Launches in 2023

Overall, we were pleased with Dr. Reddy's fiscal fourth-quarter results, both on a top- and bottom-line basis. The firm's continued efforts to grow market share and launch new products in North America and Europe have more than offset the decline from generic drug price erosion, to the slight detriment to gross margin. This is consistent with our longer-term expectations for the U.S. generic drug market, where deflationary pricing pressures have been a persistent market force. Our narrow moat rating on the company acknowledges these pressures and is primarily supported by the company's Indian business, where brand intangibles provide a buffer to margin. On a long-term basis, there were no developments that would warrant a change in our valuation assumptions. We are maintaining our $60 fair value estimate.