Dr. Reddy’s Laboratories to Lay Off Up to 400 Employees in Cost-Cutting Drive

Pharma major Dr. Reddy’s Laboratories (DRL) has reportedly launched a major cost-cutting initiative, targeting a 25% reduction in workforce-related expenses despite having spent thousands of crores on employee upskilling.

According to a Business Standard report citing sources, several high-salaried employees — including many earning over Rs 1 crore annually — have been asked to resign. Employees aged 50–55 in the R&D division have reportedly been offered voluntary retirement.

The report also stated that the company may shut down its digital therapeutics unit, while the nutraceutical division could see downsizing. An estimated 300–400 employees may be affected across the organisation.

As per DRL’s FY24 annual report, the company employed 26,343 people globally, including 21,757 permanent staff as of March 31, 2024. It hired 6,281 employees during the year, with a median salary of Rs 6 lakh.

In FY24, DRL spent Rs 5,030 crore on employee benefits and Rs 39.2 crore on training and development, with 92% of staff undergoing skill upgrades.

According to the BS, a 25% cut in workforce costs could save the company approximately Rs 1,300 crore annually, assuming similar expense levels.

"Average percentage increase in the salaries of employees other than KMP for FY2024, was 9% as compared to FY2023. There was an increase of 14% in the total remuneration of Executive Directors and KMP for FY2024 on account of computation of remuneration, on accrual basis to Executive Directors and on actual basis for KMP," the company said in its FY24 annual report.

In Q3 FY25, Dr. Reddy’s reported consolidated revenues of Rs 8,359 crore, up 16% year-on-year and 4% quarter-on-quarter, including Rs 605 crore from the acquired NRT business. Excluding NRT, revenue grew 7.5% YoY but declined 3% QoQ.

The gross profit margin stood at 59%, slightly higher YoY but lower QoQ. Margins for Global Generics and PSAI were 61.3% and 28.6%, respectively.

R&D spend rose 20% YoY to Rs 666 crore, primarily directed toward complex generics and biosimilars. EBITDA stood at Rs 2,298 crore, up 9% YoY and flat QoQ, with a margin of 27.5%. Net finance expense was Rs 2 crore, compared to a net income of Rs 96 crore last year, mainly due to forex losses and reduced interest income post the NRT acquisition.