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A diabetes treatment drug can change Dr. Reddy's fortunes, HSBC says after upgradeFor financial year 2027, HSBC is projecting Semaglutide sales of $280 million for Dr. Reddy's, of which $224 million are expected from Canada, assuming a mid-single-digit to low-double-digit unit market share. In a best case scenario, that figure could nearly double to $500 million.By Hormaz Fatakia   June 5, 2025, 9:52:46 AM IST (Updated)3 Min ReadBrokerage firm HSBC has upgraded drug manufacturer Dr. Reddy's Laboratories to "buy" from its earlier rating of "hold" on Thursday, June 5 and also raised its price target higher to ₹1,445 from ₹1,235 earlier.

The revised price target of HSBC implies a potential upside of 15.5% from Wednesday's closing levels.

HSBC wrote in its note that Semaglutide sales will help Dr. Reddy's Earnings Per Share (EPS) to return to the growth path within a year of launching in key markets.

Semaglutide, used in the treatment of type-2 diabetes, is currently short in supply compared to elevated demand in Dr. Reddy's target markets - Canada, Brazil and India, the brokerage said.

"Multiple generic companies are preparing to launch their products and we assume a high-sale timely launch of Semaglutide injection pen will be critical to gain market share," HSBC wrote in its note.

Unlike normal generics, HSBC does not expect a sharp fall in prices for Semaglutide due to strong visible demand and therefore, the brokerage expects the Semaglutide opportunity to nearly triple in these target markets over the next two to four years.

For financial year 2027, HSBC is projecting Semaglutide sales of $280 million for Dr. Reddy's, of which $224 million are expected from Canada, assuming a mid-single-digit to low-double-digit unit market share. In a best case scenario, that figure could nearly double to $500 million.

Despite the recent court order restraining Dr. Reddy's from launching Semagluide in export markets until the patent expiry of the reference brand in India in March 2026, HSBC is of the opinion that Dr. Reddy's will be among the first companies to launch in key markets that open up in 2026.

"We believe Dr. Reddy's is well placed to gain from launch of Semaglutide in the non-US, non-EU markets starting 2026," according to HSBC.

Due to rising competition, HSBC has cut its sales estimates for the Revlimid generic in financial year 2026 and as a results, its Earnings Per Share (EPS) estimates for the current financial year were cut by 5.1%, while those for the next two years were increased between 12% and 13%.

Earlier in the day, the company had announced that it has signed a collaboration agreement with Alvotech to co-develop the biosimilar candidate to Keytruda or Pembrolizumab.

Out of the 39 analysts that have coverage on Dr. Reddy's, 17 of them have a "buy" rating, nine say "hold" and 13 have a "sell" recommendation.

Shares of Dr. Reddy's Laboratories are trading 2.6% higher at ₹1,282. The stock has risen 10% in the last one month.Continue ReadingFirst Published: Jun 5, 2025 9:50 AM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsDr Reddy's sharesDr. Reddyshare market today