Dr Reddy's Q3 net profit down 19% at Rs 470 crore

Decline was due to fall in revenues from US, its key market in terms of generic sales and margins

Indian generic pharmaceutical major Dr Reddy's Laboratories Limited has reported a 19 per cent decline in consolidated net profit at Rs 470.1 crore for the quarter ended December 2016 due to fall in revenues from the US, its most important market in terms of global generic sales and margins.

Dr Reddy's revenues for the quarter under review were down 7 per cent to Rs 3,706.5 crore from Rs 3,967.9 crore in the corresponding quarter previous year. However, on a sequential basis, the gross profit margin for the quarter rose to 59.1 per cent, almost close to the levels in the year-ago period, from 56 per cent in the second quarter.

Segment wise, revenues from global generics has decreased by 9 per cent at Rs 3,063.8 crore as compared to Rs 3,355.8 crore in the corresponding quarter previous year.

Particularly, the revenues from global generics in the US market saw a 15 per cent fall at Rs 1,659.5 crore, followed by a 7 per cent decline in revenues from the emerging markets at Rs 594.8 crore. Sales in Europe grew 11 per cent during the quarter, though with limited impact on the top line owing to a small revenue base, while the company was able to register a 2 per cent growth in India at Rs 594.7 crore.

However, on a sequential basis, the company's revenues across all the major markets have shown improvement except for India where they declined 5 per cent compared to the quarter ended September 2016, due to demonetisation.

Explaining the reasons for the subdued performance in the US market on a year-on-year basis, Dr Reddy's president and chief financial officer Saumen Chakraborty said fewer number of new product launches coupled with high price erosion of existing products has resulted in the decline in revenues.

However, the company's pharmaceutical services and active ingredients (PSAI) segment has registered a 6 per cent increase in revenues at Rs 540 crore in the quarter ended December, 2017 as compared to Rs 508.2 crore in the year-ago period.

Responding to a question on the outlook for the remaining period of the current year, Dr Reddy's chief operating officer Abhijit Mukherjee said the January-March quarter too was not going to be an active quarter because few of the new product approvals expected during the quarter were being pushed out to the next year. "But this would add to the product pipeline going forward," he added.

The company also said that the company's top selling products in the US continued to hold on to their market share.