Dr Reddy's Q4 net up 44% to Rs 434 cr, annual profit doubles to Rs 1,879 cr

Divestment of derma assets, lower operating costs helped firm post higher profit growth during the quarter

Drug major Dr Reddy's Laboratories Limited has reported a 44 per cent jump in consolidated net profit at Rs 434.3 crore for the quarter ended March, 2019, from Rs 302.2 crore in the same quarter a year ago. 

Divestment of derma assets and lower operating expenses helped the company in posting a higher profit growth during the quarter, it said.

Revenues grew by 14 per cent to 4,016.6 crore for the quarter under review helped by India and emerging markets even as the company was able to marginally improve its position in North America, which is its largest revenue base. The company has received Rs 181 crore from the divestment of dermatology assets during this period.

Dr Reddy's CEO and co-chairman G V Prasad said the year ended March, 2019 represented a significant turnaround in the financial performance and steady progress on quality front. One notable achievement has been that it was able to offset the price erosion of some its products in the US market by launching higher number of new launches. 

"We said in the past that we were hoping to launch 15-odd products or so in 2018-19 but ended the year with 24 new launches. We would be launching the new products much more than that number in the current year," Dr Reddy's CFO Saumen Chakraborty said at a results press conference on Friday.

Global generics business grew by nine per cent, though sequentially down by three percent, to Rs 3,038.4 crore, while pharmaceutical services and active ingredients (PSAI) segment regained traction by growing at eight per cent at Rs 676.5 crore during the quarter ending March 2019.

For the full year  the company's net profit almost doubled at Rs 1,879.5 crore as compared to Rs 980.6 crore in the previous year. Revenues for the full year stood at Rs 15,385.1 crore, up eight per cent over Rs 14,202.8 crore the previous year.

The company management said revenue growth was on account of higher contribution from emerging markets and India; primarily due to volume gains, new launches and scale up of new markets. Revenues from North America for the year stood at Rs 6,000 crore, and remained flat compared to that in the previous year.

Dr Reddy's said it has improved its profit margin by 50 basis at 54.2 percent over the previous year on account of new launches, leverage on manufacturing overheads, favorable forex rates, offset largely by higher price erosions in the US and Europe markets.

Responding to a question on the lower capex of Rs 700 crore made during the year as compared to Rs 1,826 crore in the previous year, the company's senior management said the capacities were already built to meet the requirements and therefore the capex could be even lower than 2018-19 level in the current year.