Dr Reddy's Laboratories on Thursday reported a 29% fall in its consolidated net profit to Rs 334.4 crore for the quarter ended December 2017, compared with Rs 470 crore in the same period last year.
Dr Reddy’s Laboratories on Thursday reported a 29% fall in its consolidated net profit to Rs 334.4 crore for the quarter ended December 2017, compared with Rs 470 crore in the same period last year. The fall in profit, the company said, was due to price erosion, increased competition and impact of adverse foreign exchange in the US and European markets. The performance was a little short of expectations, according to the Bloomberg’s poll of analysts, leading to the stock ending down 2.26% at Rs 2,504 on the BSE. As per International Financial Reporting Standards (IFRS), total revenues grew by 3% to Rs 3,806 crore from Rs 3,706 crore in the same period last year. During the quarter under review, the Tax Cuts and Jobs Act of 2017, which was enacted in the US, differed tax assets and liabilities of the US entity have been remeasured, resulting in a one-time charge of Rs 93 crore. Adjusted for this one-time charge, the profit for the quarter would have been Rs 427 crore (against the reported Rs 334 crore). The global generics business took a hit with sales declining 1.45% year-on-year (YoY) to Rs 3,027 crore, and profits from the segment slipping 8.9% to Rs 1,791 crore. There was a Y-o-Y decline primarily due to price erosion on account of channel consolidation, increased competition in key products and adverse forex movement.
However, there was a 12% sequential growth, mostly driven by recent launches in the US, which include trimipramine, clofarabineinj and melphalan, the company said. Its European sales declined 7% to Rs 201 crore from Rs 215 crore. In emerging markets, sales declined 1% to Rs 590 crore from Rs 595 crore. Domestic sales bucked the trend, increasing by 3% to Rs 613 crore from Rs 595 crore. The global generics business accounted for 79% of revenues, down from 83% a year ago, following the poor show. The pharmaceutical sales and active ingredients (PSAI) sales fell from Rs 565 crore to Rs 544 crore on a Q-o-Q basis due to lower performance in custom pharmaceutical business and the Y-o-Y growth was impacted by adverse forex movement. Globally, 13 drug master files (DMFs) were filed in Q3FY18. The only bright spot was the sharp increase in revenues of the proprietary products business by 145% Y-o-Y and 112% sequentially to `252 crore.
“We had a satisfactory third quarter performance, with all our key markets performing well. We recorded sequential revenue growth of 7% despite continuing challenges such as price erosion in the US. Our first-cycle NDA approval of Impoyz is a significant milestone in the commercialization of four proprietary products pipeline. We will continue our focus on operational excellence and controlling of SG&A (selling, general and administrative) costs across the organisation,” CEO and co-chairman GV Prasad said. As part of its key priorities, the company said it will continue its journey of strengthening the quality systems and processes; actively work with the US regulatory agencies for accelerating the new product approvals; strengthen its portfolio across markets, and grow above the market growth rate besides cost optimisation and productivity improvement of R&D, manufacturing and marketing spends.