Dr Reddy's Labs Q2 Profit Falls 1% to Rs 305 Crore

Dr Reddy's Labs total revenue from operations in Q2 stood at Rs 3,559.8 crore, down 1.56 per cent

Dr Reddy's Labs Q2 Profit Falls 1% to Rs 305 Crore

Dr Reddy's Laboratories' profit fell marginally in the second quarter

Hyderabad: Dr Reddy's Laboratories Limited Tuesday said its consolidated net profit was marginally down by 1.13 per cent to Rs 305.4 crore for the September quarter, owing to price erosion and channel consolidation in the North American market. The drug major had posted a net profit of Rs 308.9 crore in July-September a year ago, Saumen Chakraborty, President, CFO and Global Head of HR of Dr. Reddy's told reporters here. DRLs total revenue from operations during the quarter under review stood at Rs 3,559.8 crore, down 1.56 per cent, as against Rs 3,616.3 crore a year ago, he said.

"In North America there was this price erosion which has happened. If you compare quarter sequentially, there is a substantial recovery of EBTDA margins we had as well as PBT (profit before tax).

"It is only in North America sequentially there is decline over previous quarter, but there has been a good improvement in PSAI (Pharmaceutical Services and Active Ingredients) as well as Indian market," Chakraborty said. "It (the price erosion) would get offset by new product launches there. This year there have been good product launches. We expect some good launches in the second half. There was also channel consolidation," he added.

Revenues from global generics (as per International Financial Reporting Standards IFRS) during the quarter under discussion was at Rs 2,861.80 crore down by one per cent when compared to the same period during last year. Revenues from generic sales (IFRS) from India was marginally up by two per cent to Rs 637 crore. Chakraborty said partial recovery was witnessed in the inventory holding by the channel post the transition to the GST regime in the Indian market.

"Pre-GST transition, the reported numbers included the excise duty component with a corresponding charge in the income statement. Post the transition, revenues reported are lower to the extent of the ED (excise duty) component, though it's a profit neutral adjustment. Normalising for this and some other transition related adjustments, the comparable year-on-year growth would be around 10 per cent," he said.

Revenues (as per IFRS) from Europe was at Rs 242 crore, year-on-year growth of 37 per cent and the growth has been primarily driven by new launches and volume uptake in some of the key products, while income from emerging markets was recorded at Rs 551 crore, year-on-year growth of 14 per cent. Abhijit Mukherjee, Chief Operating Officer of DRL said the company expects an audit by US Food and Drug Administration to one of its plants at Duvvada in Andhra Pradesh during the fourth quarter.

The US FDA had earlier raised some issues during its inspection and the company is in the process of addressing them. Mukherjee said the price erosion in North American market is likely to continue in the low double digit on the base price going forward.

"Unless we have launches in (NA), the business will be challenging," Mukherjee explained. Replying to a query, on the capex Chakraborty said they may invest about Rs 1,200 crore during the fiscal.

He said some of the capex will go into one of the formulation plants that the company is setting up at Srikakulam District in Andhra Pradesh.


(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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