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Dr Reddy's clocks highest-ever revenue in Q2; net profit down 9.5%

Sequentially, revenue from operations grew by 4.5 per cent, whereas PAT declined by 3.6 per cent

dr reddy's laboratory , dr reddy , drl pharma sector

Anjali Singh Mumbai

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Hyderabad-based Dr Reddy's Laboratories (DRL) posted a 9.5 per cent year-on-year (Y-o-Y) decline in its consolidated profit after tax (PAT) for Q2 FY25 at Rs 1,341.9 crore, while recording its highest-ever revenue from operations during the period, which rose by 16.5 per cent to Rs 8,016.1 crore.
 
The decline in net profit was attributed to one-time adjustments related to the acquisition of the Nicotine Replacement Therapy (NRT) category of Haleon plc's global portfolio of consumer healthcare brands (outside the US), tax adjustments, and minority interest transfer from the Nestlé joint venture. The growth in revenues was attributed to the success of in-licensed vaccines, new product launches, and price increases.
 
 
Revenue exceeded Bloomberg estimates by 4.1 per cent, while profit fell by 6 per cent. Sequentially, revenue from operations grew by 4.5 per cent, whereas PAT declined by 3.6 per cent. The firm’s Ebitda (earnings before interest, tax, depreciation, and amortisation) rose by 2.7 per cent Y-o-Y, reaching Rs 2,390.1 crore.
 
"We delivered another good quarter and maintained growth momentum across businesses. We made progress on our future growth drivers, operationalised our venture with Nestlé, and completed the acquisition of Nicotinell and related brands. We will continue to drive efficiency, strengthen our core businesses, and positively impact patient lives through science and innovation," said GV Prasad, co-chairman and managing director of the company.
 
DRL is expected to launch three biosimilar products in the US and European markets by 2027. Two of these products are anticipated to launch within the next 12 months, while the third is scheduled for early 2027. The biosimilars pipeline includes rituximab and denosumab, with additional products in development.
 
Speaking on the biosimilar pipeline, MV Narasimham, chief financial officer, Dr Reddy's Laboratories, stated: "Dr Reddy's has six biosimilars already commercialised in India and emerging markets. We focus on molecules with less competition, aiming to lead in the first wave of launches in the US and Europe, while building the necessary infrastructure to support branded biosimilars. Our next launches include denosumab (before December 2026) and abatacept (by December 2027) in the US and Europe. Our goal is not to be a top player immediately, but to ensure successful launches and build strength in our pipeline for sustainable growth."
 
Dr Reddy's is also developing a comprehensive GLP (glucagon-like peptide) portfolio, including semaglutide (oral and injectable) and other products. The company plans to enter all markets open for these products.
 
Global Generics (GG) contributed significantly to the overall growth, with revenues reaching Rs 7,160 crore. The business experienced a 17 per cent Y-o-Y and 4 per cent quarter-on-quarter (Q-o-Q) revenue increase, primarily driven by increased sales volumes and successful new product launches across various markets, including Emerging Markets and Europe.
 
In the North America market, revenues were up 17 per cent Y-o-Y, though they declined by 3 per cent Q-o-Q to Rs 3,730 crore this quarter. The Y-o-Y increase was due to higher sales volumes, partially offset by price erosion, while the Q-o-Q decrease resulted from lower sales volumes.
 
The company filed two new Abbreviated New Drug Applications (ANDAs) with the US Food and Drug Administration (FDA) during the quarter, taking the year-to-date total to three. As of September 30, 2024, 80 generic filings were pending approval from the USFDA.
 
Revenue in the European region grew by 9 per cent Y-o-Y and 10 per cent Q-o-Q, reaching Rs 580 crore. This growth was primarily driven by successful new product launches and momentum in the core business, partially offset by price erosion. Germany was the standout performer with 21 per cent Y-o-Y growth, while the UK experienced a 7 per cent Y-o-Y decline.
 
The company launched eight new products in Europe during the quarter, bringing the year-to-date total to 20.
 
In Emerging Markets, revenues increased by 20 per cent Y-o-Y, primarily due to market share expansion and new product introductions. Russia and the Rest of World (RoW) territories were key contributors to this growth.
 
In Q2 FY25, the company completed the acquisition of the Nicotine Replacement Therapy (NRT) portfolio outside the United States, investing GBP 458 million. It established a joint venture with Nestlé Health Science Limited to focus on nutraceuticals and supplements in India and Nepal, secured European Commission approval for its rituximab biosimilar, following positive recommendations from the European Medicines Agency's Committee for Medicinal Products for Human Use (CHMP), and entered into a licensing agreement with Takeda to commercialise vonoprazan, an innovative gastrointestinal drug, in the Indian market.
 
The firm’s stock rose by 0.36 per cent to Rs 1,272.55 apiece on the BSE.
 

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First Published: Nov 05 2024 | 8:36 PM IST

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