Drug major Dr Reddy's Laboratories today said its consolidated net profit declined by 80 per cent to Rs 126.3 crore for the June quarter due to price erosion and dip in US sales, besides stoppage of dispatches to Venezuela due to a currency crisis.
The company had reported a net profit of Rs 625.7 crore for the same quarter last fiscal, said Saumen Chakraborty, President, CFO and Global Head of HR and Abhijit Mukherjee, Chief Operating Officer of DRL.
According to them, the decline in net profit is 75 per cent to Rs 153.5 crore as per Indian accounting standards.
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DRL's consolidated net income from sales and services declined 14 per cent to Rs 3,234.5 crore for the quarter under review as against Rs 3,757.8 crore in the year-ago period.
"The four headwinds -- lack of new product launches and erosion of pricing of some of the key molecules in US, the remediation cost (for an US FDA warning letter), (currency crisis in) the Venezuelan market and crash of ruble against world currencies -- impacted the quarter.
"All headwinds are fully played out. We are not able see anything beyond this. But hopefully we will be able to pick up here onwards," Mukherjee said at a press conference.
While global generic sales declined by 14 per cent to Rs 2,664 crore during the quarter against Rs 3,096 crore during the same period last fiscal, generic sales in North America dipped 16 per cent to Rs 1,552.3 crore as against Rs 1,851.6 crore in the first quarter of 2015-16.
DRL's Co-chairman and CEO G V Prasad said in a statement, "We have come through a very difficult first quarter with our top and bottom lines impacted by a decline in volume growth particularly in the US market and the loss of business in Venezuela.
"We also faced a number of challenges in the quarter including price erosion and delayed launches as a result of the warning letter (from USFDA), which significantly impacted our earnings".
Replying to a query, Mukherjee said the company has sent the last update to US FDA with regard to the warning letter it had received last year and is in the process of sending a request to the US drug regulator for re-inspection.
On market expansion, Mukherjee said the company has plans to enter the Columbian market this year, while the Brazilian market will open up next year.
Indian generic sales grew by 10 per cent to Rs 522 crore
in the first quarter of this fiscal against Rs 476 crore in the corresponding quarter of 2015-16.
Revenue from pharmaceutical services and active ingredients was down 16 per cent to Rs 469.2 crore against Rs 561 crore during the same quarter last year.
Revenues from emerging markets stood at Rs 428 crore, a drop of 26 per cent as against Rs 578 crore during the same quarter last fiscal, due to currency issues Russia and Venezuelan markets, the company officials said.
The drug maker spent Rs 480 crore on research and development during the first quarter.
