Mumbai: Drug maker Dr Reddy’s Laboratories Ltd posted a worse than expected 26% drop in quarterly profit on Monday, on a fall in revenues from Europe.
Its shares initially rose after the Hyderabad-based firm, the only Indian drug maker listed in New York, said it was seeing higher returns from Germany-based Betapharm Arzneimittel GmbH, which it acquired in 2006 for $572 million (Rs2,442 crore), on an improving supply situation.
Dr Reddy’s, which had previously taken a hit from Betapharm, is moving Betapharm’s manufacturing operations to India and other manufacturers within Europe.
Revenues from Betapharm rose by 20% to Rs250 crore in the June quarter. But revenue from the rest of Europe fell by a fourth to Rs34.1 crore, it said.
Dr Reddy’s said April-June consolidated net profit fell to Rs135 crore from Rs183 crore a year earlier, lagging a Reuters survey forecast of Rs158 crore.
Its revenue rose by a fourth to Rs1,500 crore, slightly higher than the Reuters survey forecast of Rs1,412 crore.
Shares in Dr Reddy’s rose as much as 4.7% in intra-day trading, but shed some of the gain to close 1.72% higher at Rs675.65.
After a deal announced last month by which Japan’s Daiichi Sankyo Co. Ltd will pay up to $4.6 billion for control of Ranbaxy Laboratories Ltd, India’s top drug maker by sales, analysts expect other family-controlled firms such as Dr Reddy’s and Cipla Ltd to be the next buyout targets.
Ranbaxy is forecast to report an 80% fall in its quarterly net profit as the rupee’s depreciation swelled its foreign loan exposure.
But analysts are upbeat on the sector’s outlook as drugs with annual US sales of $50 billion are expected to go off patent by 2010, creating more opportunities for Indian firms to sell generic versions of branded products.
Dr Reddys on Monday said revenues from the global generics business rose by a fourth in the June quarter, driven by new launches and growth in North America, Russia and Germany.
Revenues from pharmaceutical services and active ingredients rose by 27%, it said.
Revenues from North America jumped by 55%. During the June quarter, Dr Reddy’s launched 26 new generic products and filed 20 new generic product registrations, it said.
Shares in Dr Reddy’s, which the market values at $2.6 billion, rose 13.5% during the June quarter, outperforming an 8% rise in the health care index and 14% drop in the benchmark index.