Revenues declined by 5% to Rs 3,554 crore due to price erosion in the US market, lower sales from its North American business and no new major launches.
Dr Reddy’s Laboratories has reported a three-fold increase in its consolidated net profit at Rs 312 crore for the fourth quarter ended March 31, 2017 compared to `74 crore in the corresponding quarter of the previous year. However, revenues declined by 5% to Rs 3,554 crore against Rs 3,756 crore due to price erosion in the US market, lower sales from its North American business and no new major launches. For the full year ended March, 2017, the net profit fell by 40% to `1,203 crore from `2,001 crore. The overall revenues were down by 9% at `14,080.9 crore as compared to Rs 15,470.8 crore in the previous year.
“FY17 has been a challenging year due to lack of new product approvals for the US market. However, our other geographies delivered good performances with several new product launches,’’ G V Prasad, co-chairman and CEO of Dr Reddy’s, said. “We are also expanding global access to our biosimilars as a result of successful registrations in the emerging markets. We will continue our focus on rationalisation of cost structures and building a sustainable quality culture across the organisation,” he added.
Responding to a query on the recent warning letters from the USFDA, Prasad accepted that there is an increasing scrutiny by the USFDA and expectations are going up every year. “We are working seriously to resolve and address the recent USFDA observations,” he said. The focus continues to build sustainable revenue stream through a mix of simple and complex generics, biosimilars and differentiated products pipeline.
“We hope to get more approvals during the second half of this fiscal and will launch about 10 products,” Saumen Chakraborty, CFO, said. During this year, the company will be expanding to newer markets such as Latin America, China, France, Spain and Italy. “We are renewing our focus in China by filing several oncology products and hope to get substantial revenues in the next three to five years,” he said.
Sales from global generics declined by 10% y-o-y to Rs 11,541 crore from Rs 12,806 crore primarily on account of lower contribution from North America and emerging markets. Revenues from pharmaceutical services and active ingredients (PSAI) declined by 5% to Rs 2,128 crore from Rs 2,238 crore. Revenues from North America declined by 16% to Rs 6,360 crore from Rs 7,545 crore due to increased competition for its key products valganciclovir, decitabine, azacitidine, etc. coupled with discontinuation of the McNeil business. The company filed 26 ANDAs as of March 31, 101 generic filings are pending approval with the USFDA. Its European sales declined slightly by 2% to Rs 761 crore from Rs 773 crore.
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Revenues from the emerging markets showed a decline of 11% to Rs 2,107 crore from Rs 2,359 crore in the previous year. However, sales in the domestic market improved by 9% to Rs 2,313 crore from Rs 2,129 crore. The company has set aside a capex of `1,169 crore for this year and has a free cash flow of Rs 792 crore.