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Informist, Thursday, Jan. 23, 2025

 

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--Dr Reddy's Oct-Dec consol net profit INR 14.14 bln
--Analysts saw Dr Reddy's Oct-Dec consol net profit INR 14.73 bln
--Dr Reddy's Oct-Dec consol net profit INR 14.14 bln vs INR 13.81 bln yr ago 
--Dr Reddy's Oct-Dec consol revenue INR 83.81 bln vs INR 72.37 bln yr ago
--Dr Reddy's Apr-Dec consol net profit INR 40.62 bln vs INR 42.68 bln yr ago
--Dr Reddy's Apr-Dec consol revenue INR 241.16 bln vs INR 208.97 bln yr ago
--Dr Reddy's Oct-Dec consol EBITDA INR 22.98 bln vs INR 21.11 bln yr ago
--Dr Reddy's Oct-Dec gross margin at 58.7% vs 58.5% year ago
--Dr Reddy's Oct-Dec global generics sales INR 73.75 bln, up 17% on year
--Dr Reddy's Oct-Dec N America generics sales INR 33.83 bln, up 1% on yr
--Dr Reddy's Oct-Dec Europe generics sales INR 12.10 bln, up 143% on year
--Dr Reddy's Oct-Dec emerging markets revenue INR 14.36 bln, up 12% on year
--Dr Reddy's Oct-Dec India generics revenue INR 13.46 bln, up 14% on year
--Dr Reddy's Oct-Dec consol R&D spend INR 6.66 bln, up 20% on year
--Dr Reddy's Oct-Dec EBITDA margin 27.5% vs 29.3% year ago
--Dr Reddy's Apr-Dec EBITDA margin 28.0% vs 30.9% year ago
--Dr Reddy's Apr-Dec EBITDA INR 67.38 bln vs INR 64.29 bln year ago
--Dr Reddy's: Oct-Dec sales growth largely driven by India, emerging markets
--Dr Reddy's: Oct-Dec sales rise driven by Nicotine Replacement Therapy pdts

 

By Narayana Krishna and Alina Geogy

 

HYDERABAD/MUMBAI - Weak momentum in sales in the US, headwinds from pricing pressure, and lack of meaningful product launches led pharma giant Dr. Reddy's Laboratories Ltd. to report a low single digit growth in the bottom line in the December quarter, which fell short of the Street's expectations. However, the company's top line grew in mid-teens during the quarter, driven by revenues from its recently acquired Nicotine Replacement Therapy portfolio, and sales in India and emerging markets.

The drugmaker's consolidated net profit for the December quarter rose 2.4% on year to INR 14.14 billion, missing the INR-14.7-billion figure estimated by analysts. This 2.4% on-year growth in the bottom line was slightly higher than the nearly 2% rise posted by the company in the December quarter of 2015. Sequentially, the bottom line rose 12.6%.

 

The company's bottom line rose on year following a decline for two consecutive quarters. The company had posted on-year growth in consolidated net profit in nine out of 11 previous consecutive quarters, of which the pace of growth was slowest in the latest quarter. 

 

The company's revenue for the quarter was INR 83.81 billion, up 15.8% from a year ago and 4.3% from the last quarter. The revenue growth, which was the second highest in six previous quarters, was higher than analysts' estimate of INR 81.57 billion. The growth was largely driven by revenues from the recently acquired Nicotine Replacement Therapy portfolio and sales in India and emerging markets, Dr. Reddy's said in a press release.

 

"We delivered double-digit growth aided by our newly acquired NRT (Nicotine Replacement Therapy) business, new launches and improved operational efficiencies," G.V. Prasad, co-chairman and managing director of the company, said in the press release.

 

For the December quarter last year, Dr. Reddy's had reported a net profit of INR 13.8 billion on a revenue of INR 72.4 billion.

 

The company's earnings before interest, tax, depreciation and amortisation for the December quarter rose 9% on year to nearly INR 23 billion. It was flat on a sequential basis. The EBITDA margin for the quarter fell to 27.5% from 29.3% a year ago. Its gross margin in the December quarter rose slightly to 58.7% from 58.5% in the same quarter a year ago.

 

Dr. Reddy's total expenditure for the quarter rose 18.4% on year to INR 66.61 billion. Finance costs more than doubled to INR 817 million for the quarter and the cost of materials rose over 27% to INR 14.53 billion. Tax expenses rose nearly 5% on year in Oct-Dec to INR 4.70 billion. The company's research & development spending for the quarter was INR 6.7 billion, 8% of the total revenue.

 

ACROSS GEOGRAPHIES

The company's global generics business for the quarter rose 17% on year to INR 73.75 billion. This growth was largely driven by revenues from higher volumes, new product launches, and the acquired nicotine replacement therapy portfolio, the company said in the release.

 

Sales in North America, the largest revenue contributor to the company at 40%, grew just 1% on year to 33.83 billion in Oct-Dec as volume growth coupled with launches of new products and favourable foreign exchange was offset by price erosion, the company said. Sales in this market declined 9% on quarter, largely on account of lower sales of certain products, such as cancer drug Lenalidomide, it said.

 

The company's sales in emerging markets, which include Russia and the Commonwealth of Independent States, rose 12% on year to INR 14.36 billion because of expansion in market share as well as new product launches. Russia, one of the key markets for the drugmaker, clocked a 19% on-year sales growth for the quarter at INR 7 billion. This rise in sales was due to higher volumes, an increase in prices, and launches of new products, though it was partially offset by adverse movement of foreign exchange.

 

Sales in the Indian market, which contributed 16% to the total revenue of the company, grew 14% on year to INR 13.46 billion in the quarter. "Growth was led by revenues from the in-licensed vaccine portfolio, new product launches as well as price increases, partially offset by lower volume pick-up in certain brands in cardiac and gastrointestinal therapy areas," the company said in the release. Dr. Reddy's launched six new brands in the country during the quarter, taking the year-to-date total to 22, it said. 

 

In Europe, the company's sales more than doubled both on year and sequentially to INR 12.10 billion. This revenue includes sales from the recently acquired Nicotine Replacement Therapy portfolio, the company said in the release.

 

Dr. Reddy's had, in June, announced the acquisition of Nicotinell and related brands from the Haleon group through its wholly-owned subsidiary Dr. Reddy's Laboratories SA for 458 million pounds. The company's arm completed the acquisition of Northstar Switzerland SARL, a Haleon group company, along with its portfolio of consumer healthcare brands in nicotine replacement therapy outside the US, in September.

 

The pharmaceutical services and active ingredients, or PSAI, segment sales rose 5% on year to INR 8.2 billion due to an increase in volumes, new launches, and favourable foreign exchange, which was partially offset by adverse price variance. However, sales from the segment fell 2% on quarter due to moderation in the growth of the services business, the company said.

 

For the nine months ended December, the company's consolidated net profit fell to INR 40.62 billion from INR 42.68 billion a year ago. However, its consolidated revenue for Apr-Dec rose to INR 241.16 billion from INR 208.97 bln in the year ago period. Dr. Reddy's posted an EBITDA of INR 67.38 billion in Apr-Dec, up from INR 64.29 billion a year ago. The company's EBITDA margin fell to 28.0% in the nine months ended December from 30.9% in the year-ago period. 
 

On Thursday, shares of Dr. Reddy's Laboratories closed at INR 1,289.40, down 0.5%, on the National Stock Exchange. The stock had hit a five-week low of INR 1,274.55 earlier in the day, but closed slightly off lows.  End

 

Edited by Akul Nishant Akhoury

 

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