Dr Reddy's net profit slips by 16% due to higher R&D spending

Pharma major Dr Reddy's Laboratories' net profit fell by nearly 16 per cent to Rs 481.60 crore for the quarter ended March 31, 2014, due to higher research and development (R&D) expenditure.
The company had posted a net profit of Rs 570.89 crore for the January-March quarter of 2012-13.
During Q4 2013-14, net sales of the company grew by 4 per cent to Rs 3,480.90 crore, from Rs 3,339.94 crore in the year-ago period, DRL President, CFO and Global Head of HR, Saumen Chakraborty said, adding the R&D expenditure for the current fiscal would be in the range of 10 to 11 per cent.

"The profit margin is down due to increased R&D spending on an year-on-year basis. Last year, we spent only 6.6 per cent (during the fourth quarter) and this quarter's R&D spending was 11.4 per cent. This is the reason why net profit has come down," Chakraborty said at a press conference after announcing the company's results.
R&D expenses rose to Rs 398.48 crore for the quarter, from Rs 232.61 crore in Q4 2012-13, the DRL official said, adding that as much as 60 per cent of the total R&D spend would go into global generics, Chakraborty said.
Shares of the company fell by 3.99 per cent to close at Rs 2,610.70 on the BSE following the results.

For the entire 2013-14, DRL's net profit rose to Rs 2,151.20 crore, from Rs 1,677.62 crore, in the previous fiscal. Net sales were up Rs 13,217.03 crore, from Rs 11,626.56 crore.

Revenues from generics stood at Rs 2,732 crore during the January-March quarter as against Rs 2,257 crore for the same period last year.
However, revenues from pharmaceutical services and active ingredients (PSAI) business recorded a negative growth of 35 per cent, at Rs 664 crore.
Revenues (generics) from Russia and other CIS countries were flat when compared to the Q4 of FY 13 at Rs 452 crore.