Dr Reddy's shares jump over 3% today. Here's why
Dr Reddy's Laboratories shares rose over 3% on Thursday, emerging as the top gainer on the Nifty Pharma index, which climbed 1.4%. Around 1:03 pm, the stock was up 3.39% at Rs 1,294.55.The surge follows the announcement of a strategic partnership with US-listed biotech firm Alvotech to develop a biosimilar version of Merck's blockbuster cancer drug Keytruda (pembrolizumab). The PD-1 inhibitor, used to treat multiple cancer types, is expected to generate $29.5 billion in global sales in 2024, making it one of the most valuable targets in the biosimilars market.Under the agreement, Dr Reddy's and Alvotech will share development and manufacturing responsibilities and retain commercialisation rights globally, with a few exceptions.Erez Israeli, CEO of Dr Reddy's, called the deal a 'major step' in the company's oncology strategy. 'This collaboration enhances our capabilities in immuno-oncology and reinforces our focus on affordable, high-quality treatment options,' he said.Alvotech, which already markets biosimilars of Humira and Stelara, sees this partnership as a way to further leverage its R&D and manufacturing platform. 'This agreement demonstrates our ability to accelerate development of key biosimilars,' said chairman and CEO Rbert Wessman.The market has reacted positively to the development. While Dr Reddy's shares are down 5.3% on a year-to-date basis, they have gained 10.5% in the past month. Analysts see the move as a strategic bet to boost the company's global presence in the competitive biosimilar space.ICICI Direct described the Keytruda biosimilar as a 'decent pipeline opportunity' despite expected competition. At a forward 12-month PE of 18.8, Dr Reddy's remains the third-cheapest stock on the Nifty Pharma index.With oncology being a core focus area and biosimilars gaining momentum globally, the collaboration with Alvotech marks a critical step in Dr Reddy's long-term growth ambitions.advertisement(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)Must Watch
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