US market spurs Dr Reddy’s Q2 by 106%; no stake sale now

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Hyderabad: Dr Reddy's Laboratories has reported a 106% growth in its net profit at Rs 217.3 crore for the second quarter ended September, compared to Rs 105.2 crore in the corresponding quarter a year ago. Revenues, including forex gain of Rs 24 crore, during the quarter touched Rs 1,836.8 crore, against Rs 1,615.1 crore, reflecting an increase of 14%. EPS stood at Rs 12 in Q2 FY10 as against Rs 6 in Q2 FY09.

On a segmental analysis, revenues from the global generics segments for the quarter stood at Rs 1,271 crore — a 14% growth year-on-year. While the US was the main driver for the growth, the German market continued to be challenging, as there is a shift in the business model to a more commodity-based one, said GV Prasad, vice-chairman and CEO. The company witnessed a 21% fall in revenues from Germany during the second quarter of FY10 to Rs 220 crore, from Rs 278 crore in Q2 FY09.

The decrease is on account of lower sales due to the AOK tender, under which DRL bagged a contract for eight products, for which the contract value has not yet been ascertained, and the pricing pressure in the market, he added.

With the ongoing reforms in the German generics pharmaceutical market, new tenders are being announced by several public health insurance companies. The company plans to participate in these tenders through its wholly-owned subsidiary, Betapharm. The company is still waiting for the final results of a majority of these tenders.

Revenues from the rest of Europe grew 29% to Rs 65.4 crore in Q2 FY10. The growth is largely contributed by UK with sales of Rs 43.6 crore, while revenues in India stood at Rs 250 crore, from Rs 220 crore in Q2 FY09, representing a growth of 13% led by key brands Omez, Omez-DSR and Razo.

Meanwhile, through the GSK alliance, the company may be launching the first product by the year-end. Prasad also refused to divulge any details on the possibility of GSK claiming stake in DRL.