Dr. Reddy’s profit jumps 12% YoY to Rs. 1,114 crore; Revenue rises over 9% | The Financial Express

Dr. Reddy’s profit jumps 12% YoY to Rs. 1,114 crore; Revenue rises over 9%

North America contributed the most to the overall sales of Dr Reddy’s in the quarter, followed by emerging markets and India.

Dr. Reddy’s profit jumps 12% YoY to Rs. 1,114 crore; Revenue rises over 9%
The company also announced that the growth in global generic sales was driven by the launch of the anemia treatment drug Lenalidomide capsules in the US market and sequential improvement in Russia sales. (File)

Dr. Reddy’s Laboratories on Friday announced its consolidated financial results for the quarter and the half year that ended on September 30, 2022. Dr. Reddy’s reported a nearly 12% year-on-year (YoY) rise in consolidated net profit for the quarter at Rs 1,114 crore.

Dr. Parag Agarwal, Chief Financial Officer, Dr. Reddy’s Labs said that the company had a strong quarter and they recorded the highest-ever sales and profit in a quarter. Total revenue in the quarter increased 9.4% on year to Rs 6,332 crore.

Dr. Reddy’s reported sales growth YoY is 9 percent. According to the company, this growth was driven by numerous factors including the successful launch of the generic version of Revlimid and a rebound in Russia market performance as the sales in the region improved in the quarter. This region saw a 4% YoY growth on account of new product launches, increase in prices and favorable movement of forex rates.

“Our EBITDA and PBT have grown in the high 20s and this has been driven by new product launches and strong cost control,” Agarwal said during the press conference on Thursday.

With respect to India and Emerging Markets, on important products to be launched, MV Ramana, CEO-Branded Markets, Dr. Reddy’s told Financial Express.com: “We have already launched an adequate number of products and these are developments that we have done for the US and Europe but the needs are pretty much the same in India and Emerging Markets. So, we will just leverage those launches.”

He also informed that as India and Emerging Markets also represent the Brand part of Dr. Reddy’s business so they are working on product management and other segments.

“So, on one hand continue to focus on the big brands and built them to the product management process. On the other hand, continue to leverage journey and pin these very important products at affordable prices across India and Emerging Markets,” he added.

Futhermore, the consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter rose about 40% on year to Rs 1,899 crore. The operating margin expanded 651 basis points to 29.99%.

The company also reported that global generics sales increased 18% on year to Rs 5,595 crore. Meanwhile, North America led the growth in this segment, seeing a rise of 48% in sales. In Europe, generic sales growth was muted at 2%, while in emerging markets, it has declined by 6%. North America contributed the most to the overall sales of Dr Reddy’s in the quarter, followed by emerging markets and India.

Dr. Reddy’s recently declared that they are going enter areas like disease management, biologics, cell and gene therapies as a part of its Horizon 2 strategy. On how to do achieve this, MV Ramana told Financial Express.com: “We do have a pre-eminent position for certain diseases where we are in the top 5 of the therapeutic area. When we look into many of the diseases there are a good number of unmet needs. We are looking at various approaches and we will first pilot this in India and then take it to other markets.”

The company also announced that the growth in global generic sales was driven by the launch of the anemia treatment drug Lenalidomide capsules in the US market and sequential improvement in Russia sales. However, the growth was partly offset by price erosion in the generic markets and a higher base due to Covid-related product sales in the previous year, Agarwal said.

The company announced that in India, sales growth was muted at 1% due to a higher base of last year, which included contributions from Covid-related product sales. Adjusted for this, the company has seen a double-digit growth in sales.

On the investments needed for the growth of neutraceuticals and OTC in India, Ramana told Financial Express.com: “So, as far as Neutra is concerned we have been successfully bringing in products in the area of diabetes, oncology, hepatology, renal diseases, and in most of these categories we have a field force that goes to the doctors. So, in that sense, it is not an additional investment. Having said that in order to penetrate deeper in terms of the usage of the product we are doing a pilot and in a systematic manner and how we can take it to the consumer and when we start to see the success in or two states we will scale that up. We have taken a similar approach in the OTC segment focused on Andhra Pradesh and Telangana and we have got a good market share and we will take that ahead in other states.”

Dr. Reddy’s gross margins during the quarter are at 59.1% which according to the company has been the highest in the last several quarters. The company also said that it is consistently investing in the R&D segment with a double-digit growth yoy.

On the new approaches to the API business, Erez Israeli, Chief Executive Officer, Dr. Reddy’s told Financial Express.com: “We are in the process of making changes in the portfolio. Since 2016-17 we are already developing products that will build new grounds for our API business. In Addition to that, we are increasing our indirect sales of APIs to countries in middle-east as well as in Japan and we also have agreements with foundations like Gates Foundations for some very interesting products that are going to mid and low-tier markets. We are actually very optimistic about the future of the APIs and it will continue to be an important foundation for our business.”

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First published on: 28-10-2022 at 21:16 IST