DRL receives 7 observations at Bachupally site

Research evidence excerpt

DRL receives 7 observations at Bachupally site

Update

June 28, 2026 04:39 PM GMT

Morgan Stanley India Company Private Limited+MDr Reddy's Laboratories Ltd | Asia Pacific Binay Singh

Equity Analyst

DRL receives 7 observations at Binay.Singh@morganstanley.comAlka Katiyar +91 22 6118-1158

Alka.Katiyar@morganstanley.com +91 22 6118-1172

Bachupally site Dhara P Shah

Research Associate

Dhara.Shah@morganstanley.com +91 22 6118-2047

Key Takeaways

USFDA issued 7 observations after a pre-launch inspection of DRL’s biologics

facility in Bachupally, Hyderabad (June 16–25, 2026).

The company stated that it will address the observations within the stipulated

time-line. Dr Reddy's Laboratories Ltd (REDY.NS, DRRD IS)

India Healthcare | India

Management highlighted that the observations are linked to earlier inspections

Stock Rating Equal-weight

and related disclosures made in October 2023 and September 2025. Industry View Attractive

Price target Rs1,215.00

Key biosimilar abatacept was filed from this facility; no material impact on Up/downside to price target (%) (10)

approval and changes in time-lines are expected. Shr price, close (Jun 25, 2026) Rs1,350.50

52-Week Range Rs1,375.90-1,148.40

Sh out, dil, curr (mn) 834

View: We do not expect a material impact on DRL's financials. Key products such as Mkt cap, curr (mn) Rs1,126,317

EV, curr (mn) Rs1,115,175

abatacept were filed at Bachupally, making the inspection relevant. However, as the Avg daily trading value (mn) Rs2,325

7 observations are not considered material in nature, management expects to Fiscal Year Ending 03/25 03/26e 03/27e 03/28e

respond to CAPA (Corrective Action and Preventive Action) within the stipulated EPS (Rs)** 68.64 51.32 54.29 63.96

time-line.