Dr Reddy’s Laboratories Ltd, India’s third-largest drug maker, had a profit of Rs325 crore in the fourth quarter after a year-earlier loss, helped by sales of a treatment for nausea. Net income in the three months ended 31 March compares with a loss of Rs23.7 crore in the same period a year earlier.
Sales more than doubled to Rs1,560 crore, the Hyderabad-based company said in an e-mailed statement on Friday.
Dr Reddy’s began selling its copy of GlaxoSmithKline Plc.’s nausea antidote Zofran in the US in December without other generic competition for 180 days. Sales of the drug, also known as ondansetron, helped buffer the impact of lower prices for Dr Reddy’s other top sellers, including versions of Merck & Co.’s Zocor and Proscar medicines.
“The company has definitely turned the corner, especially if you look at its product pipeline,” said R.K. Gupta, who manages the equivalent of $86 million (Rs353 crore), including shares of Dr Reddy’s, at Credit Capital Asset Management in New Delhi. “North American sales should continue to stay strong. Generics are doing very well there.”
Dr Reddy’s built a $2.6 billion company over two decades by copying blockbuster drugs such as Bayer AG’s Cipro and exporting them for a fraction of the price. Selling versions of Merck’s cholesterol-lowering drug Zocor and prostate treatment Proscar helped Dr Reddy’s reverse a four-year decline in sales in the US.
Pfizer Inc.’s Norvasc blood pressure medicine and GlaxoSmithKline’s Coreg heart disease pills are among brand- name drugs with total annual sales of $6.9 billion whose patents are due to expire this year.
When two competing generic drugs are introduced, the average generic price can drop to half the cost of the brand- name product, according to a US Food and Drug Administration study.
Dr Reddy’s shares fell Rs12.10 or 1.8%, to end trading at Rs665.75 on the Bombay Stock Exchange. The stock has declined 18% this year, making it the worst performer on the exchange’s 23-member healthcare Index.
Sales of generic drugs rose fourfold to Rs669 crore in the quarter from Rs157 crore a year earlier, the company said. Sales in North America, the company’s biggest market, rose to Rs740 crore from Rs153 crore, while sales of ondansetron, or generic Zofran, contributed Rs270 crore to quarterly revenue. Net income surged fivefold to Rs933 crore, or Rs58.60 a share, in the 12 months ended 31 March, from Rs163 crore, or Rs10.60, in the same period a year earlier, Dr Reddy’s said. Sales for the year climbed 168% to Rs6,510 crore.
Spending on research and development increased 14% to Rs246 crore last fiscal year, while the amount of cash and cash equivalents as on 31 March almost doubled to Rs1,860 crore.
Dr Reddy’s said it will pay a final dividend of Rs3.75 per share of face value of Rs5 each.