Dr Reddy’s Q2 net falls 17%

Dr Reddy’s Laboratories’ consolidated net profit decreased 17 per cent to Rs. 574 crore in the second quarter ended September 30, compared with Rs. 690 crore in the year-ago period.

The total revenue of the Hyderabad-based company, however, increased 7 per cent to Rs.3,587 crore against Rs. 3,357 crore in the corresponding quarter last year. Earnings per share fell to Rs. 33.70 ( Rs. 40.59).

Price erosion

Announcing the results at a press conference here on Wednesday, Saumen Chakraborti, Chief Financial Officer, Dr Reddy’s, said the dip in profit and muted revenue growth were due to price erosion in the North American market and devaluation of currencies in Russia and Ukraine, among other factors.

Revenue from sale of generics increased in India and North America by 14 and 8 per cent, respectively. European revenues were down 19 per cent.

Though there was an 11 per cent decline in revenue from Russia on account of the Rouble devaluation, strong performance in Venezuela pushed up total revenue from emerging markets by 14 per cent.

Delays impact

According to Abhijit Mukherjee, Chief Operating Officer, there were delays in approval of new products in the US, which impacted new launches, apart from customer consolidation and subsequent price erosion.

The EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin also came down to 24 per cent in the quarter, from 28 per cent last year.

Research and development expenses increased 37 per cent as indicated by the company previously. During the September quarter, Dr Reddy’s had launched nine new generic products, filed 10 new product registrations and 28 drug master files globally.

“The second half of the current year will see better launches,” Mukherjee said.

Earlier this month, Dr Reddy’s had entered into an agreement with Novartis Consumer Health Inc to acquire the title and rights to Habltrol, an over-the-counter nicotine replacement therapy transdermal patch, and to market it in the US.

The revenue implications have not been disclosed.

On Wednesday, the company’s stock closed 1.11 per cent lower at Rs. 3,046.35 on the BSE.