Dr. Reddy's Gains FDA Acceptance for First Abatacept Biosimilar in U.S.

Dr. Reddy's Laboratories has secured a critical regulatory victory with the U.S. Food and Drug Administration (FDA) accepting its Biologics License Application (BLA) for DRL-AB, a biosimilar targeting Orencia® (abatacept) for intravenous infusion. This acceptance, following submission in December 2025, positions the Hyderabad-based pharmaceutical giant as the first entity to achieve this milestone for an abatacept biosimilar in the United States.

This first-mover status is strategically significant in the highly competitive biosimilar market, potentially allowing Dr. Reddy's to capture substantial market share from the originator product, which generated approximately $3.7 billion in worldwide revenue in 2024. The market capitalization of Dr. Reddy's stood at approximately INR 1.07 trillion, or roughly $12.8 billion USD, as of February 20, 2026, with its stock trading around ₹1,280.30. While the stock has seen a 52-week range between ₹1,020 and ₹1,380, analysts maintain a mixed outlook with a consensus rating of 'Hold'.

The global biosimilar market is experiencing robust expansion, projected to grow from an estimated $49.49 billion in 2026 to over $112 billion by 2031, at a compound annual growth rate of 17.95%. This growth is fueled by patent expiries of blockbuster biologics and a global drive for cost containment in healthcare systems. Dr. Reddy's entry into the abatacept biosimilar space taps into the lucrative autoimmune and chronic disease segment, which is expected to see significant growth.

While DRL-AB is the first abatacept biosimilar to receive FDA BLA acceptance, other candidates are in development, including one from Kashiv Biosciences that has shown promising Phase 1 results, and Dr. Reddy's own candidate has been licensed to Coya Therapeutics for a combination product. The company's established expertise in developing and launching biosimilars, including Reditux (rituximab) and Versavo (bevacizumab), provides a strong foundation for this expansion into autoimmune therapies. However, Dr. Reddy's operates within a crowded field, with major players like Pfizer, Novartis, and Samsung Bioepis actively competing in the broader biosimilar market.

The path to widespread adoption for biosimilars can be protracted, influenced by complex reimbursement structures, physician prescribing habits, and the potential for aggressive defensive strategies from the originator, Bristol Myers Squibb. Orencia itself has seen significant price increases over the years, suggesting a strong incentive for BMS to protect its market share. Furthermore, while DRL-AB is the first to submit, the approval process for biosimilars is rigorous, requiring a 'totality of evidence' to demonstrate biosimilarity.

The company's P/E ratio of approximately 18.2 is notably lower than the medical sector average of ~31.01. Competition from other therapeutic areas, such as adalimumab biosimilars, which have seen numerous approvals, illustrates the intense pricing pressure that can emerge once multiple biosimilars enter the market.

The approval of DRL-AB is a pivotal moment for Dr. Reddy's, reinforcing its commitment to expanding patient access to critical biologic therapies. The company aims to launch at least one biosimilar per year, underscoring its pipeline strength. With a portfolio of six commercial products in India and presence in over 30 countries, Dr. Reddy's is well-positioned to leverage this new approval globally. The company's focus on oncology and autoimmune diseases aligns with key growth drivers in the pharmaceutical sector. While analyst sentiment remains cautious with a 'Hold' rating and an average price target around $16.90, the 'first-to-market' advantage for an abatacept biosimilar could prove to be a significant catalyst.