Dr Reddy’s Q2 net flat at Rs580 cr; revenues up marginally at Rs3,970 cr

Dr Reddy's Laboratories Ltd today reported a consolidated net profit (after tax) of Rs580 crore and diluted earnings per share (EPS) of Rs33.9 for the fiscal third quarter ended 31 December 2015.

Consolidated revenues for the October-December quarter of the financial year 2015-16, under International Financial Reporting Standards (IFRS), stood at Rs3,970 crore, an year-on-year growth of 3 per cent.

DRL said the revenue gains were driven by healthy performance in NAG, Europe and India and partially offset by emerging markets, which were impacted by unfavorable macro-economic conditions.

Gross profit margin at 59.5 per cent, improved by ~130 bps over last year

DRL said its research and development (R&D) spend stood at Rs410 crore as the company continued to focus on building complex generics and differentiated products pipeline.

For the nine-month period April-December 2015-16, DRL reported a net profit of Rs1,930 crore and diluted EPS of Rs112.6.

Consolidated revenues for the nine-month period stood at Rs11,710 crore, showing a year-on-year growth of 7 per cent while gross profit margin was up 2 percentage points at 60.6 per cent year-on-year.

Total R&D spend for the nine-month period stood at Rs1,300 crore.

DRL's global generic sales increased by 7.1 per cent to Rs3,356 crore from Rs3,134 crore in the same quarter last year and these contributed almost 84 per cent of its net sales. The sales of pharmaceutical services and active ingredients (PSAI), however, declined sharply by 20.8 per cent to Rs633 crore from Rs799 crore with contribution of 16 per cent.

Proprietary products sales improved by 12.2 per cent to Rs65.4 crore and other sales moved up by 62.5 per cent to Rs39 crore. 

The company's net sales in the US increased by 17.8 per cent to Rs2,045 crore from Rs1,736 crore in the same quarter last year mainly due to sustained performance of the injectable franchise and market share gains in key molecules. It filed four ANDAs in the US during the quarter and its cumulative approval pending with US FDA reached at 82 ANDAs.

Its domestic revenue surged by 21.8 per cent to Rs643 crore from Rs528 crore due to continued momentum of mega brands and portfolio acquired from UCB. However, sales in Europe declined by 10.4 per cent to Rs389 crore from Rs434 crore and in rest of the world sales declined sharply by 24.9 per cent to Rs787 crore from Rs1,047 crore.

Commenting on the company's third quarter results, co-chairman and CEO G V Prasad said, ''Despite multiple challenges we have had a satisfactory quarter in terms of our financial performance. All of our key markets continue to perform well and show healthy growth. However, our performance has been impacted due to adverse macro-economic conditions across key emerging market territories.

''The two approvals and one tentative approval of our NDAs in the very first review cycle has been a positive development and lays the foundation for building a strong and sustainable proprietary products business. Enhancing our quality management practices and meeting the US FDA expectations continues to be our highest priority."

For the first nine months ended December 2015, DRL's consolidated net sales increased by 7 per cent to Rs11,715 crore from Rs10,949 crore in the corresponding period of last year. Net profit moved up by 13.4 per cent to Rs1,927 crore from Rs1,699 crore. EPS worked out to Rs112.99 as against Rs99.77 in the previous period.

Its generics sales increased by 12.6 per cent to Rs6,562 crore from Rs5,827 crore. However, the sales of PSAI declined by 18.4 per cent to Rs1,671 crore from Rs2,049 crore. R&D expenditure increased by 5.4 per cent to Rs1,296 crore from Rs1,230 crore.