Hyderabad: Dr Reddy’s Laboratories Ltd posted a 7.4% increase in second quarter profit on strong sales in the US and Russia, and projected a bright outlook for the second half based on new product introductions in the US.
Net profit for India’s second largest drug maker rose to Rs 307.8 crore in the July-September period from Rs 286.7 crore a year earlier.
Bright outlook: Dr Reddy’s COO and MD Satish Reddy. By Hemant Mishra/Mint
Sales grew 21% to Rs 2,267.9 crore. In North America, revenue grew 42% to Rs 629 crore and in Russia by 28% to Rs 290 crore. In India, sales grew 10%.
“In North America, the growth was driven mainly by new launches and market share improvements,” said Satish Reddy, chief operating officer and managing director. “Growth in Russia is due to increase in volume sales across key products and growth in over-the-counter portfolio.”
The company launched five products in the US between July and September, including limited competition products like anticoagulant drug fondaparinux and its over-the-counter version of allergy drug fexofenadine psuedoephedrine, or Allegra D24.
There was continuing disappointment in Germany, where sales at its Betapharm Arzneimittel GmbH unit declined 27%.
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“Germany has to be seen in the context of extreme pricing pressure on margins due to the tender pricing,” Reddy said. Health insurance companies in Germany follow a tendering process to procure drugs.
Dr Reddy’s also announced it has got final approval from the US Food and Drug Administration for its version of Eli Lilly’s Zyprexa (olanzapine 20 mg tablets) used in the treatment of schizophrenia.
Dr Reddy’s has 180-day shared exclusivity with Israel-based Teva Pharmaceutical Industries Ltd to market olanzapine 20 mg in the US.
“We are planning to jointly launch the drug soon in the US market,” said Umang Vohra, chief financial officer. “The impact of the launch will only be felt fully in the last quarter.”
Olanzapine has a $1.5 billion (around Rs 7,500 crore) market in the US alone.
The company expects better growth in the second half of this fiscal.
“The 180-day exclusivity of olanzapine, new launches from Bristol facility in the US and scale-ups that we get from our R&D investments will help us in putting up a good growth in second half,” said G.V. Prasad, chief executive and vice-chairman.
Dr Reddy’s acquired the Bristol facility that manufactures penicillin from GlaxoSmithKline Plc. in March 2011.
The company is also betting big on limited competition drugs like fondaparinux.
A limited competition drug involves complex technology and production process and usually takes longer to complete clinical trials, which deter rival companies from entering the same space quickly.
Dr Reddy’s manufactures fondaparinux, a limited competition drug licensed from Australian drug company Alchemia Ltd.
“We plan to launch at least two limited competition drugs,” Prasad said.
Analysts said the results were in line with expectations.
Shares of Dr. Reddy’s rose by more than 2% to Rs 1,579.60 apiece on the Bombay Stock Exchange on Tuesday, outpacing the Sensex’s 1.86% gain.
“Given the new launches and with Betapharm issues almost ironed out, we expect a positive outlook for the company in the coming two quarters,” said Sarabjit Kour Nangra, vice-president of research at Angel Broking Ltd.
Prasad said Dr Reddy’s is looking to “acquire a mid-sized company” in Russia, where government policy asks for companies to have manufacturing presence to operate out of the country. Dr Reddy’s recently called off a transaction to acquire the pharmaceutical prescription portfolio of JB Chemicals and Pharmaceuticals Ltd in Russia.
In the second-quarter, the company launched 28 generic products, filed 17 new product registrations and 11 drug master files globally.