An improved performance in India and emerging markets helped Dr. Reddy’s Laboratories offset a decline in revenue from the two established markets of North America and Europe and post nearly 70% increase in the consolidated net profit during the quarter ended September 30.
The net profit was ₹518.3 crore, an increase of 69.71% over the year earlier period’s ₹305.4 crore, according to the results prepared under the Indian Accounting Standards announced here on Friday.
The total income increased 9.86% to ₹3,945.7 crore (₹3,591.4 crore).
Describing the performance and progress as encouraging, co-chairman and CEO G.V. Prasad said a continuous focus on execution, operational efficiency and cost optimisation were showing results.
“Looking ahead, our priority will be to resolve pending regulatory issues and continue to work on execution and cost structures,” he said in a statement.
Chief Financial Officer Saumen Chakraborty, briefing the media with COO Erez Israeli here, said a favourable foreign exchange was also a factor, contributing to nearly half of the 170 bps improvement in the gross profit margin of 55%.
Sale of rights
Other income was boosted by a gain of ₹46.4 crore because of sale of rights relating to Cloderm brand, including its authorised generic, and sale of antibiotic manufacturing facility in Bristol, U.S.
While total revenue from global generics business increased 7%, the increase in the revenue from India and emerging markets was 8% and 36% respectively.
The growth came amid a flat growth in North America (0.4% decline) and a decline of 21% in revenue from Europe. Pharmaceuticals Services and Active Ingredients (PSAI) revenue grew 7%, while the growth in Proprietary Products was 19%. To queries, Mr. Chakraborty said price erosion was the factor behind the decline in generics revenue in the US and Europe, with the absence of new product launches also being a cause in the latter. On a sequential basis, the company was impacted due to a litigation surrounding the sale of its generic version of Suboxone, an opioid dependence treatment drug, in the US. On the Emerging Markets, he said Russia, Ukraine, Kazakhstan and Romania contributed significantly to the growth. The growth was primarily because of improved volume offtake in existing markets and scale up in new markers. The performance in India, he added, was boosted by the launch of six new products. Mr.Israeli said while the company was expected to maintain the performance, it was difficult to predict about the prospects in North America. Price erosion due to increased competition in some of the key molecules was a reason for the flat growth in the US for the company.