Results

Dr Reddy's Q3 net profit gains 88% on US sales

BS Reporter / Chennai/ Hyderabad Feb 04, 2012, 00:25

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Hyderabad-based pharma major Dr Reddy’s Laboratories Limited (DRL) on Friday reported an 88 per cent jump in net profit to Rs 513.1 crore for the quarter ended December 2011, as compared with Rs 273.2 crore in the corresponding quarter last year.

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Results Snapshot more  Sales 9673.75  Total Expenses 7924.63  Net Profit 1426.20  EPS(TTM) 84.78  Equity 84.11

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The surge in profitability was on the back of a huge upside derived from the launch of high-margin Olanzapine (generic product) in North America, the one geographical market whose contribution to the company's total revenues in this quarter rose to 46 per cent from 31 per cent during in a year-ago period.

The company’s total revenues for the quarter under review also grew 46 per cent to Rs 2,769.2 crore from Rs 1,898.5 crore in the corresponding previous quarter in spite of a less-than-anticipated growth witnessed in countries like Russia.

“The quarter offered us the best results we ever had, backed by the launch of exclusivity product Olanzapine and a healthy contribution from other limited competition products in North America,” K Satish Reddy, managing director and chief operating officer of Dr Reddy's, said while cautioning that the same cannot be expected in the coming quarters even though growth in business outside the present upside was ensured.

Overall, the results boosted the company’s gross profit margins to 60 per cent to revenues (Rs1,657.5 crore ) from 55 per cent, also helped by the benefit of rupee depreciation. Similarly, EBIDTA margins (Rs 920.8 crore) increased 33 per cent to sales with a year-on-year growth of 127 per cent, as compared with the normal 22-23 per cent range.

The company’s chief financial officer, Umang Vohra, said the EBIDTA margin of 22-23 per cent was what the company was expected to maintain in the coming quarters.

Revenues from the North American market grew 120 per cent to Rs 1,282.6 crore, as compared with Rs 582.3 crore, while in dollar terms Olanzapine alone contributed $99 million to the total $242 million revenues registered in this market during the third quarter.

Among the other regions, Europe, the second largest market in revenue terms, remained almost flattish with 6 per cent growth, while Russia reported less-than-anticipated growth of 15 per cent on account of delayed onset of winter resulting in poor sales of seasonal drugs like Cetrizine and due to liquidity crunch faced by the trade, according to Reddy. But, January sales in Russia have already shown a growth of 50 per cent, he said.

Indian market, which has registered a 11 per cent growth in revenues to Rs 333 crore from Rs 300 crore, is in a moderate range compared to other strong markets, but the company is still ok with it because it already started witnessing a double-digit growth compared to 6-7 per cent in the recent past.

While the revenue contribution from high-margin Olanzapine continued in the third quarter, important launches are coming up in the next six months to sustain good growth in North America, according to the company managing director. The company’s OTC (over-the-counter) sales also crossed an important milestone of $100 million in the US market during the quarter, he added.