Dr Reddy's falls 3%, hits 52-week low; stock slips 10% in one month

Shares of Dr Reddy's Laboratories hit a 52-week low of Rs 4,055.85, down 3 per cent on the BSE in Thursday's intra-day trade, after Russia ordered military operations in Ukraine and reports emerged of blasts in some major Ukrainian cities.

The stock of the pharmaceutical company, which has a significant presence in the Russian market, has fallen below its previous low of Rs 4,135.90 touched on March 19, 2021. In the past one month, it has underperformed the market by falling 10 per cent as compared to 5 per cent decline in the S&P BSE Sensex.

According to a Business Standard report, a Dr Reddy's spokesperson said the company has had a strong presence in the region for over three decades. "We hope for a peaceful resolution. In case of an escalation, ensuring the well-being of our staff, meeting patient needs, and business continuity would be our main priorities. We are monitoring developments closely and are preparing accordingly," the official said.

In September 2020, Dr. Reddy's had signed up with the Russian Direct Investment Fund (RDIF) — Russia's sovereign wealth fund — to cooperate on clinical trials and distribution of Sputnik V vaccine in India. Upon regulatory approval in India, RDIF had committed to supply 100 million doses of the vaccine to Dr. Reddy's.

During the financial year 2020-21 (FY21), revenue from Russia was Rs 1,580 crore, representing a year-on-year decline of 6 per cent due to a depreciation of ruble compared to the Indian rupee. Moreover, sales were subdued on account of an overall market slowdown, the company said in FY 21 annual report.

In Russia, the company's key products — such as Nise, Omez, Nasivin, Cetrine and Ibuclin — were ranked among the top 200 best-selling formulation brands, as per IQVIA in its report for the 12-month period ended March 31, 2021, it said.

Revenue from CIS countries (including Romania) was Rs 740 crore, representing 15 per cent growth over the previous year. The growth was led by Ukraine, Kazak, Uzbek and Romania including certain tender sales, the company said in annual report.

According to analysts at Edelweiss Securities, the high US contribution, which is exposed to price pressure and regulatory risks, makesthe road ahead difficult for Dr Reddy.

"Furthermore, lucrative launches are limited until gRevlimid in H2FY23 and uncertainty persists on launch timelines for complex generic products. Fresenius’s potential US pegfilgrastim launch is likely to gain traction only in FY23 post-Onpro kind of device launch. The Sputnik opportunity is shrinking, and its ramp-up is unlikely until clarity emerges on booster doses or Sputnik Light," the brokerage firm said company update.