Facing multiple headwinds across global markets, Dr Reddy’s Laboratories (DRL) has reported a 3.4% drop in its net profit at Rs 285 crore for the September quarter, as against Rs 295 crore in the corresponding quarter of the previous fiscal.
Facing multiple headwinds across global markets, Dr Reddy’s Laboratories (DRL) has reported a 3.4% drop in its net profit at Rs 285 crore for the September quarter, as against Rs 295 crore in the corresponding quarter of the previous fiscal. The drug maker also saw its revenues falling marginally by 1% to Rs 3,546 crore. The pharma major attributed the fall in profit to price erosion in the North America market, increased competition for some of its key products and GST implementation in India. The company also saw its revenue from US decline by 11%, as pricing pressure continued to mount in a market that contributes more than 40% of its revenues. North American revenues fell to Rs 1,432 crore for the second quarter, compared with Rs 1,613 crore for the corresponding period of last fiscal.
However strong EBITDA performance helped maintain its stability. The company’s scrip closed at Rs 2,431 on the BSE on Tuesday, a mere 0.07% drop from its previous close. The company reported a EBITDA margin of 19% for the September quarter, almost 2% higher than the corresponding period of last fiscal. DRL’s EBITDA stood at Rs 6,888 crore for the quarter. Saumen Chakraborty, CFO, said, the price erosion in the North America market, which has been prevalent since last three quarters, is likely to be offset with new launches post the second half of this fiscal. “Healthy performance in India, emerging markets, Europe and PSAI business as well as continued focus on cost control have contributed to sequential growth in our top line as well as bottom line with an EBITDA increase of 105% over the previous quarter,” Dr Reddy’s co-chairman and CEO GV Prasad said.
Sales of global generics declined marginally to Rs 2,862 crore from Rs 2,900 crore as reported in the second quarter of last year. “Higher price erosion was due to channel consolidation and increased competition in some of key products namely Valgancyclovir, Azacitidine, etc,” Chakraborty said. The silver lining is that its generic sales in Europe went up sharply by 36% to Rs 242 crore from Rs 178 crore. Sales in emerging market sales increased by 14% to Rs 551 crore from Rs 483 crore. In India, the sales improved only by 2% to Rs 637 crore from Rs 625 crore. Sales from the Pharmaceutical Services and Active Ingredients (PSAI) declined to Rs 565 crore from Rs 578 crore. On a sequential basis, revenues registered a growth of 22% due to improved order flow. During the quarter, 16 Drug Master Files (DMFs) were filed globally of which two were in the US. The cumulative filings as of September 30, 2017 was 780. With regard to the USFDA audit for its Duvvada plant in AP, the plant will have to go through another audit by the fourth quarter.