Dr Reddy’s Laboratories has reported a 60.12% fall in its consolidated net profit at Rs 308.9 crore for the quarter ended September, compared to Rs 774.7 crore in the corresponding quarter previous year due to drop in sales in North America and Venezuela markets. Revenues fell by 10% to Rs 3,616.3 crore during the quarter from R4,020 crore due to continuous pricing pressure and moderate volumes.
The gross profit margin stood at 56%, a decline of about 530 basis points over that of previous year, primarily on account of lower sales due to increased competitive intensity in some of the key molecules in the US. “All our major businesses have shown sequential improvement over the previous quarter with revenues growing by 11% and EBITDA by 61%. We have made considerable progress in our remediation efforts and continue to work on addressing the concerns of the regulators. Looking ahead, we will continue to focus on launching new products in our generics business, improving productivity and strengthening our quality management systems,” Dr Reddy’s co-chairman and CEO G V Prasad said.
The selling, general and administrative (SGA) expenses has gone up by 6%. The company had accrued a potential liability of R34.4 crore on account of Bombay High Court’s dismissal of a writ petition filed by Indian Pharmaceutical Alliance (IPA) regarding price controls by the National Pharmaceutical Pricing Authority (NPPA).
The company will continue to focus on quality improvements and increase penetration in the emerging markets besides strengthening the product pipeline. “While we are awaiting the USFDA inspection of our facility, we have spent less than $40 million as remediation costs for improving the quality parameters,” Saumen Chakraborty, CFO, said.
Giving a segmental analysis, revenues from global generics declined by 12% to R2,899.5 crore, primarily on account of lower contribution from North America, which is the largest market for the company besides loss of sales from Venezuela. Revenues from North America alone fell by 13% on account of increased competition in valgancyclovir and injectable franchise, coupled with pricing pressure and moderation in volumes offtake. During the quarter, four products were launched.