Dr Reddy's slips to 4th spot in sales revenue as Lupin, Aurobindo race past

Lupin wins second spot with 24% growth in consolidated revenues at Rs 17,494 cr

The second largest Indian pharmaceutical company by sales till the last year, Dr Reddy's Laboratories Limited has slipped to fourth position among the top Indian generic generics players in 2016-17, after witnessing a 9 percent decline in revenues during the financial year.

The change in the pecking order was marked by the fall of its US generics revenues to below $1 billion level owing to fewer new launches as well as a steep price erosion of the existing products in the US market.

Mumbai-based Lupin Limited rose to the second place by registering a 24 per cent growth in consolidated revenues at Rs 17,494 crore while Hyderabad-based Aurobindo Pharma became the third largest pharma company by achieving Rs 15,470 crore sales revenues, an increase of 8 per cent over the previous year. During this time Dr Reddy's revenues dipped to Rs 14080.9 crore from Rs 15,470.8 crore in 2015-16.

Dr Reddy's stayed in the second position even after the top order had undergone a major change with the acquisition of Ranbaxy Laboratories by Sun Pharma in a landmark $4 billion transaction in the year 2014. However, there was a manifold increase in the gap between the top two companies post Ranbaxy-Sun Pharma merger.

The acquisition had catapulted Sun Pharma to be the largest Indian pharmaceutical company by sales in 2015. With Rs 30,264 crore revenues in 2016-17, Sun Pharma remains on top leaving Lupin a distant second.

The regulatory compliance issues flagged by the US Food and Drug Administration(USFDA) for over two years involving three of its manufacturing facilities had taken a toll on Dr Reddy's financial performance as fewer product approvals and the fewer launches had limited the scope for revenue growth for the company in the US, the most important market for the company.

Dr Reddy's chief financial officer Saumen Chakraborty, in a recent conference call said the revenue decline was primarily on account of continued pricing pressure, no new product launch in the quarter together with supply constraint impacting the US business.

Interestingly, both Lupin and Aurobindo had surpassed the $1 billion mark in US revenues for the first time in 2016-17 after posting a 37 per cent and 12 per cent respective rise, while Dr Reddy's closed the year at $956 million with a 16 per cent decline in US generics revenues.

However, the company's pharmaceutical services and active ingredients (PSAI) business, which grew 17 per cent at $55 million in the US during the same period could keep the company's overall revenues still at around $billion.