Dr Reddy's Q2 net down by 17 percent

Pharmaceutical major Dr Reddy's Laboratories Limited has reported 17 percent decline in net profit during the second quarter ended September, at Rs.574.10 crore against Rs.690.25 crore in the corresponding quarter last year.

The Hyderabad-based drugmaker attributed the drop in margin to lower sales in US market, the biggest contributor to its revenues.

"We didn't have meaningful launches this year and US market is launch dependent. Another reason was that there is large amount of customer consolidation happening. As a result of this there was erosion of base business," Abhijit Mukherjee, chief operating officer, Dr Reddy's told reporters.

Saumen Chakraborty, chief financial officer, said the muted growth was also on account of depreciation of the rouble and Ukranian currency against Indian rupee, increase in research and development expenditure and selling, general and administrative (SG&A) expenses.

However, the gross profit in absolute terms was eight percent, year-on-year improvement of 50 basis points.

The revenues during the quarter were Rs.3,587 crore, a growth of nearly seven percent compared to the same quarter last year.

The growth in revenues from Global Generics (GG) segment was nine while there was no growth in income from the Pharmaceutical Services and Active Ingredients (PSAI) segment.

There was only eight percent growth in revenues from North America but revenues from emerging markets and India grew by 14 percent each.

"This is the highest growth in India in a single quarter," said Chakraborty.

The New York Stock Exchange-listed firm launched nine new generic products including one in North America, two each in India and Russia and other CIS countries and Europe.

Stating that the customer consolidation process is almost over, the company expects the second half of the current financial year will be better than the first half. It, however, said the growth in second half may not be substantial.

The pharma major also announced that it entered into an asset purchase agreement with Novartis Consumer Health Inc, a unit of Swiss firm Novartis, to acquire the title and rights to Habitrol franchise (an over the counter nicotine replacement therapy transdermal patch) and to market the product in the US.

The agreement entered into on Oct 18 is subject to a review by the US Federal Trade Commission.