Dr. Reddy’s Laboratories RDY announced that it has entered into a collaboration and license agreement with Alvotech ALVO to co-develop and commercialize a biosimilar candidate to Merck’s MRK blockbuster PD-L1 inhibitor, Keytruda (pembrolizumab), across the world.
Keytruda, Merck’s biggest revenue driver, generated sales worth $29.5 billion in 2024. Sales of the drug grew 6% year over year to $7.21 billion in the first quarter of 2025. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years.
Terms of RDY's Latest Deal With ALVO
Per the latest agreement, RDY and ALVO will jointly share all costs for developing and manufacturing the biosimilar candidate similar to MRK’s Keytruda, which is approved for treating several types of cancer indications.
Each company will hold the right to commercialize the product globally upon successful development.
The latest deal is expected to significantly enhance Dr. Reddy’s biosimilar portfolio across emerging markets. A potential biosimilar of Keytruda should further enhance the company’s capabilities in oncology, which remains a key focus area.
Meanwhile, with this deal, Alvotech is looking to leverage its dedicated research and development and manufacturing platform for biosimilar candidates and expand its pipeline into global markets.
Year to date, Dr. Reddy’s shares have lost 6.5% compared with the industry’s 11.8% decline.
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RDY's Ongoing Partnership With ALVO
RDY and ALVO originally signed a license and supply agreement in 2024 for the commercialization of AVT03, a biosimilar candidate to Amgen’s AMGN Prolia and Xgeva (denosumab).
In March 2025, RDY and ALVO announced the FDA’s acceptance of a regulatory filing, seeking the approval of AVT03, a proposed biosimilar of Amgen’s Prolia (denosumab) and Xgeva (denosumab), for review.
The biologic license application was submitted under the 351(k) pathway, which is the FDA’s biosimilar application process. AVT03 is a human monoclonal antibody developed by Alvotech.
Amgen's Prolia treats osteoporosis in postmenopausal women at high risk of fractures, especially when other treatments are ineffective. AMGN’s Xgeva helps prevent fractures, spinal cord compression and the need for bone-related surgery or radiation in patients with multiple myeloma or bone metastases from solid tumors.
Subject to approval, RDY/ALVO’s AVT03 could significantly enhance patient access to affordable treatment options for osteoporosis and other bone-related conditions. Given the high cost of branded drugs, a biosimilar alternative could provide substantial financial relief to patients and healthcare systems.
Additionally, with osteoporosis affecting millions across the United States, the introduction of AVT03 could improve treatment accessibility for a large patient population in need of effective bone health therapies.
Dr. Reddy’s has been undertaking several strategic measures to diversify its generics portfolio.
RDY's Zacks Rank
Dr. Reddy’s carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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