Dr Reddy's Q2 net up 26% at Rs 722 cr

Higher sales growth and sustained product margins from the company's US generics business led to the good numbers

Hyderabad-based pharmaceutical major Dr Reddy's Laboratories has reported a 26 per cent increase in consolidated net profit at Rs 722 crore for the quarter ended September, on the back of higher sales growth and sustained product margins from the company's US generics business.

Its net income from sales and services grew 11 per cent at Rs 3,999 crore for the quarter under review, againts Rs 3,588 crore in the year ago period. The gross profit margin for the period stood at 61.3 per cent, an improvement of 285 basis points over the corresponding period last year, Chief Financial Officer Saumen Chakraborty said the US generics business grew 32 per cent at Rs 1,856.3 crore even without any addition from the blockbuster drug Nexium, which was launched in the last week of September, 2015, as there has been a sustained performance of the injectable franchise and market share gains in key molecules.

Contribution from products from valganciclover, sirolimus, memantine and Habitrol launched after the corresponding previous quarter was particularly good, according to the company.

Together with Rs 69.2 crore crore revenue from the pharmaceutical services and active ingredients(PSAI) business, the US market accounted for 48 per cent of the total sales revenues of the company during the quarter. The company's overall PSAI business declined by 7 per cent to Rs 591.8 crore from Rs 639.2 crore in the year ago period.

Among the other markets European operations grew by 65 per cent though the revenue base of this geography was smallat Rs 242.6 crore, on the back of two drug launches while Indian business reported the next best performance of 14 per cent at Rs 546.4 crore. Saumen said the second quarter sales in India would have grown 20 per cent had there been no spill over of certain despatches to the current month due to transport strike. Responding to a question Dr Reddy's chief operating officer Abhijit Mukherjee said they expect an upward of $ 50 million from Nexium in the current year.

However, he maintained that the next couple of quarters may not show a similar performance because of the higher base effect.