Dr Reddy’s net profit drops by 29%

Commenting on the results, Dr Reddy’s CEO and co-chairman, G V Prasad said “We recorded sequential revenue growth of 7 per cent, despite continuing challenges such as price erosion in the U S.

By Author  |  Published: 26th Jan 2018  12:15 amUpdated: 29th Jan 2018  4:14 pm
TALK: Dr Reddy’s CFO Saumen Chakraborty (left) with COO Abhijit Mukherjee announcing the company’s results in Hyderabad on Thursday

Hyderabad: Dr Reddy’s Laboratories on Thursday reported a 28.86 per cent year-on-year (YoY) dip in net profit at Rs 334 crore for the third quarter. The company said its numbers were impacted by one-time charge of Rs 93 crore due to deferred tax on assets and liabilities of the US entity. The company had reported a net profit of Rs 470.01 crore in the corresponding quarter of last year.

Commenting on the results, Dr Reddy’s CEO and co-chairman, G V Prasad said “We recorded sequential revenue growth of 7 per cent, despite continuing challenges such as price erosion in the U S. Our first-cycle new drug application (NDA) approval of Impoyz is a significant milestone in the commercialisation of our proprietary products pipeline.”

Saumen Chakraborty, chief financial officer, Dr Reddy’s Laboratories, said, “Revenues from global generics witnessed sequential growth of 5 per cent, primarily driven by the US and emerging markets. There was a year-on-year decline of 2 per cent, primarily on account of adverse foreign exchange as the US dollar depreciated by about 4 per cent and lower contribution from Europe generics market. Revenues from North America saw year-on-year decline of 3 per cent, primarily on account of higher price erosions due to channel consolidation and increased competition in some of our key molecules, and impact of adverse foreign exchange.”

He added, “As of December 2017, cumulatively 102 generic filings are pending for approval with the USFDA (99 ANDAs and 3 NDAs under 505(b)(2) route). Of these 99 ANDAs, 59 are Para IVs out of which we believe 29 have ‘First to File’ status.”

Revenues from India saw year-on-year growth of 3 per cent. Normalising for the GST transition related adjustments, the comparable growth is about 11 per cent. Revenues from Europe saw a year-on-year decline of 7 per cent, primarily on account of higher price erosion in some of the key molecules coupled with temporary supply disruptions.

The company will focus on building complex generics, biosimilars and differentiated products pipeline. The company which has set a capex of Rs 1,000 crore for the fiscal has spent Rs 779 crore in the last three quarters.

Chakraborty said, “We expect more drug filings in the fourth quarter and we will replicate what we have achieved in the last fiscal. We are aiming for 10-15 product launches during the FY 2019.”

When asked what are the steps the company is taking to offset the impact from North America, Abhijit Mukherjee, chief operating officer, Dr Reddy’s Laboratories, told Telangana Today, “In the next fiscal, we foresee quality and high value launches happening in this market. Next fiscal should be better than this fiscal in terms of launch richness. This year had certain assets, but next year could see the launch of better value assets, subjected to regulatory approvals.”

In the generics space, he says Dr Reddy’s is keeping track of entry barriers for products and the company is banking on certain products. “We will be leveraging the opportunities in the complex products category such as oncology,” he added.

Dr Reddy’s also announced that the German drug regulator has carried out re-inspection of its Bachupally formulations plant (unit 2). The company’s subsidiary Betapharm has received a communication form the regulator that it can now start dispatching products to Europe from this plant.