Dr Reddy's Q1 net up 7% on robust US sales

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Primarily led by robust sales in the US generics market, Hyderabad-based pharmaceutical major Dr Reddy's Laboratories Limited (DRL) reported a 7% increase in its net profit to Rs 361 crore for the first quarter ended June 2013, as compared with Rs 336 crore in the corresponding quarter last year.

Revenues stood at Rs 2,844.9 crore during the quarter under review, as against Rs 2,540.6 crore during the same period last year, reflecting an increase of 12%.

Revenues from generic sales from the US market registered a 37% growth to touch Rs 1,087.1 crore from Rs 792 crore in the corresponding quarter last year.

Attributing the growth to two new products (zelodronic acid 5mg/100ml injection and lamotrigine XL) that were launched during the quarter and significant traction in the US market share of products such as tactrolimus and fondaparinux, Abhijit Mukherjee, president (global generics) of DRL, told mediapersons that it, however, would be a testing time for a lot of generic players in the US market, going forward.

'Oral solids are not likely to return value. It is going to put pressure on return on capital. We need to graduate ourselves to more of high-barrier-to-entry products. The contribution from non-oral solids, which is currently in single digit, would be 30% to our overall revenues by FY17,' he said here on Tuesday .

DRL’s generic sales revenues from India, however, remained flat at Rs 349.3 crore during the first quarter, as against Rs 348.2 crore in the corresponding period last year, owing to pricing policy-related destocking in the trade, softness in the oncology segment and the Maharashtra trade strike for the majority of June, according to Saumen Chakraborty, president and chief financial officer of DRL.

'Around 348 essential drugs have been brought under price control. And, the total value that the pharma industry has given up is Rs 1,600 crore, and that of DRL is Rs 58 crore, which is roughly about 3% of our revenues,' he said.

Stating that the company was trying to work with a universe of external partnerships, even as it was looking at a stream of capability-based acquisitions, Mukherjee said the company was expecting 40% of its revenues to flow in through various forms of partnerships by FY17. DRL expects at least 10 filings to come in from external partnerships this year.