Dr Reddy`s Q1 net down 26%

CORPORATE SCORECARD

Drug major Dr Reddy's Laboratories today announced a 26 per cent drop in profit after tax, worse than expectations, hit by its underperforming Germany-based Betapharm unit for the quarter ended June 30,2008.

The Hyderabad-based firm, the only Indian drug maker listed in New York, posted Rs 134.6 crore as profits during the quarter as compared with Rs 182.5 crore in the corresponding quarter last year.

Betapharm, which Dr Reddy's bought in 2006 for $572 million, has been a drag on earnings due to supply constraints and price falls. Dr Reddy's is moving Betapharm's manufacturing operations to India and other manufacturers within Europe.

Total revenues during the period grew by 25 per cent to Rs 1,503.8 crore, as against Rs 1,198.3 crore in the previous year.

According to a release issued by the company, revenues from the global generics business grew by 25 per cent to Rs 1,030 crore driven mainly by growth in North America and Russia.

The 62 per cent growth in North America revenues was driven by a combination of volume growth in key products and the launch of new products in the last 12 months, along with the acquisition of the Shreveport facility in that country.

"About 100 products in Germany have been transferred to Dr Reddy's own supply chain network, of which 14 products have been transferred to India," the release said.

Business in Russia also grew by 21 per cent driven by key brands, such as Nise, Ketorol and Cetrine. Revenues from pharmaceutical services and bulk drug sales rose by 27 per cent during the quarter to Rs 460 crore.

Domestic business, too, grew by 9 per cent to reach Rs 220 crore.

Shares in Dr Reddy's, which the market values at $2.6 billion, rose by 13.5 per cent during the June quarter, outperforming the benchmark index, the Sensex, which declined by 14 per cent during the quarter.

The stock ended the day's trading up 1.72 per cent at Rs 675.65 on the BSE.