Dr. Reddy’s Laboratories shares rise 4%: Two factors fueling the rally today

Shares of Dr. Reddy’s Laboratories surged 4 percent on Thursday amid a rally in the broader market. 
The company’s announcement of a strategic collaboration with Alvotech to co-develop, manufacture, and commercialize a biosimilar version of Keytruda (pembrolizumab) for global markets helped the stock to trade in the green today. Adding to the momentum, HSBC upgraded Dr. Reddy’s to a ‘Buy’ from ‘Hold’, and raised its target price to Rs 1,445, up from Rs 1,235. 

The pharma stock rose 4% to Rs 1303.45 against previous close of Rs 1252.15 on BSE. Market cap of the firm climbed to Rs 1.07 lakh crore on BSE.

The stock has gained 11% in a year and risen 40.18% in two years. 

The share stands higher than the 5 day, 10 day, 20 day, 30 day, 50 day, 100 day and 200 day moving averages. 

Keytruda is a immunotherapy drug for the treatment of various cancers. It clcoked global sales of $29.5 billion in 2024. The collaboration brings together the biosimilar expertise of both companies and is likely to accelerate development timelines while broadening the global reach of the product.

Development, manufacturing, and commercialization of the drug will be handled collaboratively by Dr. Reddy's and Alvotech, with shared expenses and responsibilities, according to the agreement. Both businesses will also be able to sell the biosimilar abroad, barring specific circumstances.

Meanwhile, according to broker HSBC's statement, the type-2 diabetes medication semaglutide is anticipated to dramatically increase the company's earnings per share (EPS) in key markets within a year after launch.

For semaglutide, the brokerage views Canada, Brazil, and India as important target markets where supply is now limited but demand is still high. In contrast to other generics, HSBC does not anticipate a significant drop in Semaglutide prices as a result of ongoing demand. Over the next two to four years, it predicts that the Semaglutide opportunity in these areas may almost treble.